Correlation Between Playtech Plc and SEB SA
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and SEB SA 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 SEB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech Plc and SEB SA, you can compare the effects of market volatilities on Playtech Plc and SEB SA 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 SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and SEB SA.
Diversification Opportunities for Playtech Plc and SEB SA
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playtech and SEB is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Playtech Plc i.e., Playtech Plc and SEB SA go up and down completely randomly.
Pair Corralation between Playtech Plc and SEB SA
Assuming the 90 days trading horizon Playtech Plc is expected to generate 1.08 times more return on investment than SEB SA. However, Playtech Plc is 1.08 times more volatile than SEB SA. It trades about 0.1 of its potential returns per unit of risk. SEB SA is currently generating about 0.04 per unit of risk. If you would invest 64,800 in Playtech Plc on September 12, 2024 and sell it today you would earn a total of 9,100 from holding Playtech Plc or generate 14.04% 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. SEB SA
Performance |
| Timeline |
| Playtech Plc |
| SEB SA |
Playtech Plc and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and SEB SA
The main advantage of trading using opposite Playtech Plc and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| Playtech Plc vs. National Atomic Co | Playtech Plc vs. OTP Bank Nyrt | Playtech Plc vs. Samsung Electronics Co | Playtech Plc vs. Samsung Electronics Co |
| SEB SA vs. JD Sports Fashion | SEB SA vs. Charter Communications Cl | SEB SA vs. TechnipFMC PLC | SEB SA vs. Albion Technology General |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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