Correlation Between Playtech Plc and ING Groep

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Can any of the company-specific risk be diversified away by investing in both Playtech Plc and ING Groep 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 ING Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and ING Groep NV, you can compare the effects of market volatilities on Playtech Plc and ING Groep 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 ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and ING Groep.

Diversification Opportunities for Playtech Plc and ING Groep

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Playtech and ING is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Playtech Plc i.e., Playtech Plc and ING Groep go up and down completely randomly.

Pair Corralation between Playtech Plc and ING Groep

Assuming the 90 days trading horizon Playtech plc is expected to generate 0.9 times more return on investment than ING Groep. However, Playtech plc is 1.11 times less risky than ING Groep. It trades about -0.07 of its potential returns per unit of risk. ING Groep NV is currently generating about -0.31 per unit of risk. If you would invest  872.00  in Playtech plc on August 29, 2024 and sell it today you would lose (15.00) from holding Playtech plc or give up 1.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Playtech plc  vs.  ING Groep NV

 Performance 
       Timeline  
Playtech plc 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Playtech Plc may actually be approaching a critical reversion point that can send shares even higher in December 2024.
ING Groep NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Playtech Plc and ING Groep Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Playtech Plc and ING Groep

The main advantage of trading using opposite Playtech Plc and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, ING Groep 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 ING Groep will offset losses from the drop in ING Groep's long position.
The idea behind Playtech plc and ING Groep NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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