Correlation Between Playtech Plc and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and Autohome ADR 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 Plc and Autohome ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and Autohome ADR, you can compare the effects of market volatilities on Playtech Plc and Autohome ADR 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 Plc with a short position of Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Autohome ADR.
Diversification Opportunities for Playtech Plc and Autohome ADR
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playtech and Autohome is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Playtech Plc 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 plc are associated (or correlated) with Autohome ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome ADR has no effect on the direction of Playtech Plc i.e., Playtech Plc and Autohome ADR go up and down completely randomly.
Pair Corralation between Playtech Plc and Autohome ADR
Assuming the 90 days trading horizon Playtech plc is expected to generate 0.34 times more return on investment than Autohome ADR. However, Playtech plc is 2.96 times less risky than Autohome ADR. It trades about 0.0 of its potential returns per unit of risk. Autohome ADR is currently generating about -0.13 per unit of risk. If you would invest 867.00 in Playtech plc on September 3, 2024 and sell it today you would lose (2.00) from holding Playtech plc or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech plc vs. Autohome ADR
Performance |
| Timeline |
| Playtech plc |
| Autohome ADR |
Playtech Plc and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Autohome ADR
The main advantage of trading using opposite Playtech Plc and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, Autohome ADR 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 Autohome ADR will offset losses from the drop in Autohome ADR's long position.| Playtech Plc vs. ANTA SPORTS PRODUCT | Playtech Plc vs. LG Display Co | Playtech Plc vs. USWE SPORTS AB | Playtech Plc vs. TRAVEL LEISURE DL 01 |
| Autohome ADR vs. Air Transport Services | Autohome ADR vs. RETAIL FOOD GROUP | Autohome ADR vs. QUEEN S ROAD | Autohome ADR vs. COPLAND ROAD CAPITAL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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