Correlation Between Light Wonder and PlayAGS

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

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

Diversification Opportunities for Light Wonder and PlayAGS

0.43

Correlation Coefficient

Light Wonder  PlayAGS

Very weak diversification

The 3 months correlation between Light and PlayAGS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS and Light Wonder 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 Light Wonder 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 Light Wonder i.e., Light Wonder and PlayAGS go up and down completely randomly.

Pair Corralation between Light Wonder and PlayAGS

Considering the 90-day investment horizon Light Wonder is expected to generate 2.16 times less return on investment than PlayAGS. But when comparing it to its historical volatility, Light Wonder is 1.93 times less risky than PlayAGS. It trades about 0.12 of its potential returns per unit of risk. PlayAGS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  890.00  in PlayAGS on April 28, 2024 and sell it today you would earn a total of  253.00  from holding PlayAGS or generate 28.43% return on investment over 90 days.

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

Light Wonder  vs.  PlayAGS

Light Wonder

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Light Wonder are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Light Wonder showed solid returns over the last few months and may actually be approaching a breakup point.

PlayAGS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 10 (%) 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.

Pair Trading with Light Wonder and PlayAGS

The main advantage of trading using opposite Light Wonder and PlayAGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder 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 Light Wonder 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.