Correlation Between PLAYTECH and ARISTOCRAT LEISURE
Can any of the company-specific risk be diversified away by investing in both PLAYTECH and ARISTOCRAT LEISURE 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 PLAYTECH and ARISTOCRAT LEISURE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYTECH and ARISTOCRAT LEISURE, you can compare the effects of market volatilities on PLAYTECH and ARISTOCRAT LEISURE 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 PLAYTECH with a short position of ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTECH and ARISTOCRAT LEISURE.
Diversification Opportunities for PLAYTECH and ARISTOCRAT LEISURE
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PLAYTECH and ARISTOCRAT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTECH and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE and PLAYTECH 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 PLAYTECH are associated (or correlated) with ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of PLAYTECH i.e., PLAYTECH and ARISTOCRAT LEISURE go up and down completely randomly.
Pair Corralation between PLAYTECH and ARISTOCRAT LEISURE
Assuming the 90 days trading horizon PLAYTECH is expected to generate 2.5 times more return on investment than ARISTOCRAT LEISURE. However, PLAYTECH is 2.5 times more volatile than ARISTOCRAT LEISURE. It trades about 0.09 of its potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.19 per unit of risk. If you would invest 664.00 in PLAYTECH on October 25, 2024 and sell it today you would earn a total of 207.00 from holding PLAYTECH or generate 31.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYTECH vs. ARISTOCRAT LEISURE
Performance |
| Timeline |
| PLAYTECH |
| ARISTOCRAT LEISURE |
PLAYTECH and ARISTOCRAT LEISURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYTECH and ARISTOCRAT LEISURE
The main advantage of trading using opposite PLAYTECH and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTECH position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.| PLAYTECH vs. BURLINGTON STORES | PLAYTECH vs. H2O Retailing | PLAYTECH vs. GALENA MINING LTD | PLAYTECH vs. Retail Estates NV |
| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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