Correlation Between PT Global and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both PT Global 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 PT Global and Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Global Mediacom and Playtech plc, you can compare the effects of market volatilities on PT Global 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 PT Global with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and Playtech Plc.
Diversification Opportunities for PT Global and Playtech Plc
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 06L and Playtech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and PT Global 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 PT Global Mediacom 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 PT Global i.e., PT Global and Playtech Plc go up and down completely randomly.
Pair Corralation between PT Global and Playtech Plc
Assuming the 90 days trading horizon PT Global Mediacom is expected to generate 5.19 times more return on investment than Playtech Plc. However, PT Global is 5.19 times more volatile than Playtech plc. It trades about 0.02 of its potential returns per unit of risk. Playtech plc is currently generating about 0.05 per unit of risk. If you would invest 1.15 in PT Global Mediacom on September 3, 2024 and sell it today you would lose (0.40) from holding PT Global Mediacom or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Global Mediacom vs. Playtech plc
Performance |
| Timeline |
| PT Global Mediacom |
| Playtech plc |
PT Global and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Global and Playtech Plc
The main advantage of trading using opposite PT Global and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global 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 PT Global Mediacom 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.| Playtech Plc vs. ANTA SPORTS PRODUCT | Playtech Plc vs. LG Display Co | Playtech Plc vs. USWE SPORTS AB | Playtech Plc vs. TRAVEL LEISURE DL 01 |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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