Correlation Between Playtech Plc and LG Display
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and LG Display 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 LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and LG Display Co, you can compare the effects of market volatilities on Playtech Plc and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and LG Display.
Diversification Opportunities for Playtech Plc and LG Display
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Playtech and LGA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Playtech Plc i.e., Playtech Plc and LG Display go up and down completely randomly.
Pair Corralation between Playtech Plc and LG Display
Assuming the 90 days trading horizon Playtech plc is expected to generate 0.74 times more return on investment than LG Display. However, Playtech plc is 1.35 times less risky than LG Display. It trades about -0.24 of its potential returns per unit of risk. LG Display Co is currently generating about -0.48 per unit of risk. If you would invest 581.00 in Playtech plc on March 2, 2024 and sell it today you would lose (32.00) from holding Playtech plc or give up 5.51% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Playtech plc vs. LG Display Co
Performance |
Timeline |
Playtech plc |
LG Display |
Playtech Plc and LG Display Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playtech Plc and LG Display
The main advantage of trading using opposite Playtech Plc and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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