Correlation Between Altria and Playtech Plc

Can any of the company-specific risk be diversified away by investing in both Altria and Playtech Plc 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 Altria and Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altria Group 995 and Playtech plc, you can compare the effects of market volatilities on Altria and Playtech Plc 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 Altria with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Playtech Plc.

Diversification Opportunities for Altria and Playtech Plc

-0.47

Correlation Coefficient

Altria  Playtech Plc

Very good diversification

The 3 months correlation between Altria and Playtech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group 995 and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and Altria 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 Altria Group 995 are associated (or correlated) with Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of Altria i.e., Altria and Playtech Plc go up and down completely randomly.

Pair Corralation between Altria and Playtech Plc

Assuming the 90 days trading horizon Altria Group 995 is expected to generate 1.19 times more return on investment than Playtech Plc. However, Altria is 1.19 times more volatile than Playtech plc. It trades about 0.04 of its potential returns per unit of risk. Playtech plc is currently generating about -0.17 per unit of risk. If you would invest  13,607  in Altria Group 995 on October 10, 2024 and sell it today you would earn a total of  183.00  from holding Altria Group 995 or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Altria Group 995  vs.  Playtech plc

Altria Group 995

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altria Group 995 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Altria is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Playtech plc

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Playtech Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Altria and Playtech Plc

The main advantage of trading using opposite Altria and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Playtech Plc 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 Plc will offset losses from the drop in Playtech Plc's long position.

The idea behind Altria Group 995 and Playtech plc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..