Correlation Between Inspired Entertainment and PlayAGS

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Can any of the company-specific risk be diversified away by investing in both Inspired Entertainment and PlayAGS 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 Inspired Entertainment and PlayAGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspired Entertainment and PlayAGS, you can compare the effects of market volatilities on Inspired Entertainment and PlayAGS 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 Inspired Entertainment with a short position of PlayAGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspired Entertainment and PlayAGS.

Diversification Opportunities for Inspired Entertainment and PlayAGS

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Inspired and PlayAGS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS and Inspired Entertainment 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 Inspired Entertainment are associated (or correlated) with PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Inspired Entertainment i.e., Inspired Entertainment and PlayAGS go up and down completely randomly.

Pair Corralation between Inspired Entertainment and PlayAGS

Given the investment horizon of 90 days Inspired Entertainment is expected to generate 5.6 times more return on investment than PlayAGS. However, Inspired Entertainment is 5.6 times more volatile than PlayAGS. It trades about 0.0 of its potential returns per unit of risk. PlayAGS is currently generating about -0.19 per unit of risk. If you would invest  920.00  in Inspired Entertainment on April 14, 2024 and sell it today you would lose (6.00) from holding Inspired Entertainment or give up 0.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Inspired Entertainment  vs.  PlayAGS

 Performance 
       Timeline  
Inspired Entertainment 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Inspired Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Inspired Entertainment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
PlayAGS 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, PlayAGS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Inspired Entertainment and PlayAGS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inspired Entertainment and PlayAGS

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

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