Correlation Between Playtech Plc and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and Westlake Chemical 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 Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and Westlake Chemical, you can compare the effects of market volatilities on Playtech Plc and Westlake Chemical 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 Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Westlake Chemical.
Diversification Opportunities for Playtech Plc and Westlake Chemical
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Playtech and Westlake is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical 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 Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of Playtech Plc i.e., Playtech Plc and Westlake Chemical go up and down completely randomly.
Pair Corralation between Playtech Plc and Westlake Chemical
Assuming the 90 days trading horizon Playtech plc is expected to generate 0.55 times more return on investment than Westlake Chemical. However, Playtech plc is 1.82 times less risky than Westlake Chemical. It trades about 0.14 of its potential returns per unit of risk. Westlake Chemical is currently generating about -0.09 per unit of risk. If you would invest 859.00 in Playtech plc on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Playtech plc or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech plc vs. Westlake Chemical
Performance |
| Timeline |
| Playtech plc |
| Westlake Chemical |
Playtech Plc and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Westlake Chemical
The main advantage of trading using opposite Playtech Plc and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc |
| Westlake Chemical vs. Albemarle | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. SIVERS SEMICONDUCTORS AB | Westlake Chemical vs. Norsk Hydro ASA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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