Correlation Between Temple Bar and Playtech Plc

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

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

Diversification Opportunities for Temple Bar and Playtech Plc

0.78

Correlation Coefficient

Temple Bar  Playtech Plc

Poor diversification

The 3 months correlation between Temple and Playtech is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Temple Bar Investment and Playtech Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech Plc and Temple Bar 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 Temple Bar Investment are associated (or correlated) with Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech Plc has no effect on the direction of Temple Bar i.e., Temple Bar and Playtech Plc go up and down completely randomly.

Pair Corralation between Temple Bar and Playtech Plc

Assuming the 90 days trading horizon Temple Bar is expected to generate 1.95 times less return on investment than Playtech Plc. But when comparing it to its historical volatility, Temple Bar Investment is 3.12 times less risky than Playtech Plc. It trades about 0.41 of its potential returns per unit of risk. Playtech Plc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  29,489  in Playtech Plc on April 24, 2025 and sell it today you would earn a total of  9,461  from holding Playtech Plc or generate 32.08% return on investment over 90 days.

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

Temple Bar Investment  vs.  Playtech Plc

Temple Bar Investment

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Temple Bar Investment are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Temple Bar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Playtech Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech Plc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Playtech Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Temple Bar and Playtech Plc

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

The idea behind Temple Bar Investment and Playtech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.