Correlation Between Playtech Plc and Hershey
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and Hershey 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 Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech Plc and Hershey Co, you can compare the effects of market volatilities on Playtech Plc and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Hershey.
Diversification Opportunities for Playtech Plc and Hershey
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playtech and Hershey is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Playtech Plc i.e., Playtech Plc and Hershey go up and down completely randomly.
Pair Corralation between Playtech Plc and Hershey
Assuming the 90 days trading horizon Playtech Plc is expected to generate 0.93 times more return on investment than Hershey. However, Playtech Plc is 1.07 times less risky than Hershey. It trades about -0.02 of its potential returns per unit of risk. Hershey Co is currently generating about -0.64 per unit of risk. If you would invest 72,600 in Playtech Plc on October 18, 2024 and sell it today you would lose (400.00) from holding Playtech Plc or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Playtech Plc vs. Hershey Co
Performance |
| Timeline |
| Playtech Plc |
| Hershey |
Playtech Plc and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Hershey
The main advantage of trading using opposite Playtech Plc and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Playtech Plc vs. Creo Medical Group | Playtech Plc vs. Infrastrutture Wireless Italiane | Playtech Plc vs. Rosslyn Data Technologies | Playtech Plc vs. Datagroup SE |
| Hershey vs. G5 Entertainment AB | Hershey vs. Ion Beam Applications | Hershey vs. Flutter Entertainment PLC | Hershey vs. Datalogic |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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