Correlation Between Playtech Plc and CHINA CONBANK
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and CHINA CONBANK 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 CHINA CONBANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and CHINA BANK ADR20, you can compare the effects of market volatilities on Playtech Plc and CHINA CONBANK 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 CHINA CONBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and CHINA CONBANK.
Diversification Opportunities for Playtech Plc and CHINA CONBANK
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playtech and CHINA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 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 CHINA CONBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of Playtech Plc i.e., Playtech Plc and CHINA CONBANK go up and down completely randomly.
Pair Corralation between Playtech Plc and CHINA CONBANK
Assuming the 90 days trading horizon Playtech plc is expected to generate 1.06 times more return on investment than CHINA CONBANK. However, Playtech Plc is 1.06 times more volatile than CHINA BANK ADR20. It trades about 0.12 of its potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.09 per unit of risk. If you would invest 468.00 in Playtech plc on September 4, 2024 and sell it today you would earn a total of 397.00 from holding Playtech plc or generate 84.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Playtech plc vs. CHINA BANK ADR20
Performance |
| Timeline |
| Playtech plc |
| CHINA BANK ADR20 |
Playtech Plc and CHINA CONBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and CHINA CONBANK
The main advantage of trading using opposite Playtech Plc and CHINA CONBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, CHINA CONBANK 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 CHINA CONBANK will offset losses from the drop in CHINA CONBANK's long position.| Playtech Plc vs. American Homes 4 | Playtech Plc vs. INVITATION HOMES DL | Playtech Plc vs. American Airlines Group | Playtech Plc vs. LANDSEA HOMES P |
| CHINA CONBANK vs. Tri Pointe Homes | CHINA CONBANK vs. Beazer Homes USA | CHINA CONBANK vs. Addus HomeCare | CHINA CONBANK vs. Salesforce |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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