Correlation Between Playtech Plc and GenIP PLC

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

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

Diversification Opportunities for Playtech Plc and GenIP PLC

0.4

Correlation Coefficient

Playtech Plc  GenIP PLC

Very weak diversification

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

Pair Corralation between Playtech Plc and GenIP PLC

Assuming the 90 days trading horizon Playtech Plc is expected to generate 0.37 times more return on investment than GenIP PLC. However, Playtech Plc is 2.68 times less risky than GenIP PLC. It trades about 0.24 of its potential returns per unit of risk. GenIP PLC is currently generating about 0.01 per unit of risk. If you would invest  29,650  in Playtech Plc on April 23, 2025 and sell it today you would earn a total of  9,000  from holding Playtech Plc or generate 30.35% return on investment over 90 days.

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

Playtech Plc  vs.  GenIP PLC

Playtech Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech Plc are ranked lower than 19 (%) 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.

GenIP PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GenIP PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GenIP PLC 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 GenIP PLC

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

The idea behind Playtech Plc and GenIP 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.