Correlation Between InterContinental and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Playtech plc, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Playtech Plc.
Diversification Opportunities for InterContinental and Playtech Plc
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between InterContinental and Playtech is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Playtech Plc go up and down completely randomly.
Pair Corralation between InterContinental and Playtech Plc
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 1.33 times more return on investment than Playtech Plc. However, InterContinental is 1.33 times more volatile than Playtech plc. It trades about 0.23 of its potential returns per unit of risk. Playtech plc is currently generating about 0.04 per unit of risk. If you would invest 10,800 in InterContinental Hotels Group on November 6, 2024 and sell it today you would earn a total of 2,100 from holding InterContinental Hotels Group or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Playtech plc
Performance |
| Timeline |
| InterContinental Hotels |
| Playtech plc |
InterContinental and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Playtech Plc
The main advantage of trading using opposite InterContinental and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. SBM OFFSHORE | InterContinental vs. Singapore Telecommunications Limited | InterContinental vs. TITAN MACHINERY | InterContinental vs. AGRICULTBK HADR25 YC |
| Playtech Plc vs. National Beverage Corp | Playtech Plc vs. Thai Beverage Public | Playtech Plc vs. Media and Games | Playtech Plc vs. THAI BEVERAGE |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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