Correlation Between ARISTOCRAT LEISURE and PLAYTECH
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and PLAYTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and PLAYTECH, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and PLAYTECH.
Diversification Opportunities for ARISTOCRAT LEISURE and PLAYTECH
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARISTOCRAT and PLAYTECH is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and PLAYTECH go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and PLAYTECH
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.9 times more return on investment than PLAYTECH. However, ARISTOCRAT LEISURE is 1.11 times less risky than PLAYTECH. It trades about 0.16 of its potential returns per unit of risk. PLAYTECH is currently generating about -0.3 per unit of risk. If you would invest 4,160 in ARISTOCRAT LEISURE on October 10, 2024 and sell it today you would earn a total of 120.00 from holding ARISTOCRAT LEISURE or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. PLAYTECH
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| PLAYTECH |
ARISTOCRAT LEISURE and PLAYTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and PLAYTECH
The main advantage of trading using opposite ARISTOCRAT LEISURE and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. Playtech plc | ARISTOCRAT LEISURE vs. Addtech AB | ARISTOCRAT LEISURE vs. ASURE SOFTWARE | ARISTOCRAT LEISURE vs. SOFI TECHNOLOGIES |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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