Correlation Between Playtech Plc and China Resources
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and China Resources 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 Resources 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 Resources Gas, you can compare the effects of market volatilities on Playtech Plc and China Resources 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 Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and China Resources.
Diversification Opportunities for Playtech Plc and China Resources
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playtech and China is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and China Resources Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Gas 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 Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Gas has no effect on the direction of Playtech Plc i.e., Playtech Plc and China Resources go up and down completely randomly.
Pair Corralation between Playtech Plc and China Resources
Assuming the 90 days trading horizon Playtech plc is expected to generate 0.31 times more return on investment than China Resources. However, Playtech plc is 3.18 times less risky than China Resources. It trades about 0.35 of its potential returns per unit of risk. China Resources Gas is currently generating about 0.08 per unit of risk. If you would invest 846.00 in Playtech plc on September 14, 2024 and sell it today you would earn a total of 48.00 from holding Playtech plc or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech plc vs. China Resources Gas
Performance |
| Timeline |
| Playtech plc |
| China Resources Gas |
Playtech Plc and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and China Resources
The main advantage of trading using opposite Playtech Plc and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, China Resources 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 Resources will offset losses from the drop in China Resources' long position.| Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc |
| China Resources vs. USWE SPORTS AB | China Resources vs. Ming Le Sports | China Resources vs. Japan Asia Investment | China Resources vs. Playtech plc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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