Correlation Between Playtech Plc and Olympic Steel

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

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

Diversification Opportunities for Playtech Plc and Olympic Steel

0.11

Correlation Coefficient

Playtech Plc  Olympic Steel

Average diversification

The 3 months correlation between Playtech and Olympic is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Playtech Plc i.e., Playtech Plc and Olympic Steel go up and down completely randomly.

Pair Corralation between Playtech Plc and Olympic Steel

Assuming the 90 days horizon Playtech plc is expected to generate 0.28 times more return on investment than Olympic Steel. However, Playtech plc is 3.62 times less risky than Olympic Steel. It trades about -0.05 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.39 per unit of risk. If you would invest  950.00  in Playtech plc on September 27, 2024 and sell it today you would lose (7.00) from holding Playtech plc or give up 0.74% of portfolio value over 90 days.

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

Playtech plc  vs.  Olympic Steel

Playtech plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Playtech Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Olympic Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olympic Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Playtech Plc and Olympic Steel

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

The idea behind Playtech plc and Olympic Steel 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.