Correlation Between Apple and Playtech Plc

Can any of the company-specific risk be diversified away by investing in both Apple and Playtech Plc 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 Apple and Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Playtech plc, you can compare the effects of market volatilities on Apple and Playtech Plc 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 Apple with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Playtech Plc.

Diversification Opportunities for Apple and Playtech Plc

0.4

Correlation Coefficient

Apple  Playtech Plc

Very weak diversification

The 3 months correlation between Apple and Playtech is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and Apple 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 Apple Inc are associated (or correlated) with Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of Apple i.e., Apple and Playtech Plc go up and down completely randomly.

Pair Corralation between Apple and Playtech Plc

Assuming the 90 days trading horizon Apple is expected to generate 1.52 times less return on investment than Playtech Plc. In addition to that, Apple is 1.06 times more volatile than Playtech plc. It trades about 0.08 of its total potential returns per unit of risk. Playtech plc is currently generating about 0.13 per unit of volatility. If you would invest  766.00  in Playtech plc on August 30, 2024 and sell it today you would earn a total of  96.00  from holding Playtech plc or generate 12.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Playtech plc

Apple Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Playtech plc

Risk-Adjusted Performance

10 of 100

OK

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 uncertain basic indicators, Playtech Plc may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Apple and Playtech Plc

The main advantage of trading using opposite Apple and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.

The idea behind Apple Inc and Playtech plc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.