Correlation Between Sankyo and PLAYTECH

Can any of the company-specific risk be diversified away by investing in both Sankyo and PLAYTECH at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sankyo and PLAYTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sankyo Co and PLAYTECH, you can compare the effects of market volatilities on Sankyo and PLAYTECH and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sankyo with a short position of PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sankyo and PLAYTECH.

Diversification Opportunities for Sankyo and PLAYTECH

-0.08

Correlation Coefficient

Sankyo  PLAYTECH

Good diversification

The 3 months correlation between Sankyo and PLAYTECH is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sankyo Co and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH and Sankyo is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sankyo Co are associated (or correlated) with PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Sankyo i.e., Sankyo and PLAYTECH go up and down completely randomly.

Pair Corralation between Sankyo and PLAYTECH

Assuming the 90 days horizon Sankyo Co is expected to under-perform the PLAYTECH. In addition to that, Sankyo is 1.31 times more volatile than PLAYTECH. It trades about -0.05 of its total potential returns per unit of risk. PLAYTECH is currently generating about 0.13 per unit of volatility. If you would invest  845.00  in PLAYTECH on October 26, 2024 and sell it today you would earn a total of  23.00  from holding PLAYTECH or generate 2.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sankyo Co  vs.  PLAYTECH

Sankyo

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sankyo Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sankyo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PLAYTECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYTECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sankyo and PLAYTECH

The main advantage of trading using opposite Sankyo and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sankyo position performs unexpectedly, PLAYTECH can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PLAYTECH will offset losses from the drop in PLAYTECH's long position.

The idea behind Sankyo Co and PLAYTECH pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.