Correlation Between SMA Solar and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Playtech Plc, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Playtech Plc.
Diversification Opportunities for SMA Solar and Playtech Plc
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SMA and Playtech is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Playtech Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech Plc and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Playtech Plc go up and down completely randomly.
Pair Corralation between SMA Solar and Playtech Plc
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 4.12 times more return on investment than Playtech Plc. However, SMA Solar is 4.12 times more volatile than Playtech Plc. It trades about 0.08 of its potential returns per unit of risk. Playtech Plc is currently generating about 0.13 per unit of risk. If you would invest 1,431 in SMA Solar Technology on September 12, 2024 and sell it today you would earn a total of 81.00 from holding SMA Solar Technology or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Playtech Plc
Performance |
| Timeline |
| SMA Solar Technology |
| Playtech Plc |
SMA Solar and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Playtech Plc
The main advantage of trading using opposite SMA Solar and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Hong Kong Land | SMA Solar vs. Neometals | SMA Solar vs. Coor Service Management | SMA Solar vs. Fidelity Sustainable USD |
| Playtech Plc vs. National Atomic Co | Playtech Plc vs. OTP Bank Nyrt | Playtech Plc vs. Samsung Electronics Co | Playtech Plc vs. Samsung Electronics Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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