Correlation Between Sumitomo Mitsui and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Construction and Playtech plc, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Playtech Plc.
Diversification Opportunities for Sumitomo Mitsui and Playtech Plc
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sumitomo and Playtech is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Construction and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and Sumitomo Mitsui 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 Sumitomo Mitsui Construction 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Playtech Plc go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Playtech Plc
Assuming the 90 days horizon Sumitomo Mitsui Construction is expected to under-perform the Playtech Plc. But the stock apears to be less risky and, when comparing its historical volatility, Sumitomo Mitsui Construction is 1.19 times less risky than Playtech Plc. The stock trades about -0.02 of its potential returns per unit of risk. The Playtech plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 512.00 in Playtech plc on August 25, 2024 and sell it today you would earn a total of 345.00 from holding Playtech plc or generate 67.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Construction vs. Playtech plc
Performance |
| Timeline |
| Sumitomo Mitsui Cons |
| Playtech plc |
Sumitomo Mitsui and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Playtech Plc
The main advantage of trading using opposite Sumitomo Mitsui and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.| Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc | Sumitomo Mitsui vs. Apple Inc |
| Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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