Correlation Between Playtech Plc and LBG Media
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and LBG Media 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 LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech Plc and LBG Media PLC, you can compare the effects of market volatilities on Playtech Plc and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and LBG Media.
Diversification Opportunities for Playtech Plc and LBG Media
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playtech and LBG is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Playtech Plc i.e., Playtech Plc and LBG Media go up and down completely randomly.
Pair Corralation between Playtech Plc and LBG Media
Assuming the 90 days trading horizon Playtech Plc is expected to generate 0.54 times more return on investment than LBG Media. However, Playtech Plc is 1.85 times less risky than LBG Media. It trades about 0.24 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.04 per unit of risk. If you would invest 29,489 in Playtech Plc on April 21, 2025 and sell it today you would earn a total of 9,011 from holding Playtech Plc or generate 30.56% 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. LBG Media PLC
Performance |
Timeline |
Playtech Plc |
LBG Media PLC |
Playtech Plc and LBG Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playtech Plc and LBG Media
The main advantage of trading using opposite Playtech Plc and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.Playtech Plc vs. British American Tobacco | Playtech Plc vs. PPHE Hotel Group | Playtech Plc vs. MoneysupermarketCom Group PLC | Playtech Plc vs. Virgin Wines UK |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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