Correlation Between Playtech Plc and Apax Global

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

By analyzing existing cross correlation between Playtech Plc and Apax Global Alpha, you can compare the effects of market volatilities on Playtech Plc and Apax Global 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 Apax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Apax Global.

Diversification Opportunities for Playtech Plc and Apax Global

-0.1

Correlation Coefficient

Playtech Plc  Apax Global

Good diversification

The 3 months correlation between Playtech and Apax is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and Apax Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apax Global Alpha 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 Apax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apax Global Alpha has no effect on the direction of Playtech Plc i.e., Playtech Plc and Apax Global go up and down completely randomly.

Pair Corralation between Playtech Plc and Apax Global

Assuming the 90 days trading horizon Playtech Plc is expected to generate 1.81 times more return on investment than Apax Global. However, Playtech Plc is 1.81 times more volatile than Apax Global Alpha. It trades about 0.1 of its potential returns per unit of risk. Apax Global Alpha is currently generating about -0.02 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 Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Playtech Plc  vs.  Apax Global Alpha

Playtech Plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech Plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Playtech Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apax Global Alpha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apax Global Alpha has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Apax Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Playtech Plc and Apax Global

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

The idea behind Playtech Plc and Apax Global Alpha 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.