Correlation Between PLAYTIKA HOLDING and Boiron SA

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

By analyzing existing cross correlation between PLAYTIKA HOLDING DL 01 and Boiron SA, you can compare the effects of market volatilities on PLAYTIKA HOLDING and Boiron SA 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 PLAYTIKA HOLDING with a short position of Boiron SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and Boiron SA.

Diversification Opportunities for PLAYTIKA HOLDING and Boiron SA

-0.7

Correlation Coefficient

PLAYTIKA HOLDING  Boiron SA

Excellent diversification

The 3 months correlation between PLAYTIKA and Boiron is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Boiron SA go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and Boiron SA

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to generate 1.14 times more return on investment than Boiron SA. However, PLAYTIKA HOLDING is 1.14 times more volatile than Boiron SA. It trades about 0.14 of its potential returns per unit of risk. Boiron SA is currently generating about -0.15 per unit of risk. If you would invest  656.00  in PLAYTIKA HOLDING DL 01 on September 4, 2024 and sell it today you would earn a total of  124.00  from holding PLAYTIKA HOLDING DL 01 or generate 18.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

PLAYTIKA HOLDING DL 01  vs.  Boiron SA

PLAYTIKA HOLDING

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PLAYTIKA HOLDING reported solid returns over the last few months and may actually be approaching a breakup point.

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PLAYTIKA HOLDING and Boiron SA

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

The idea behind PLAYTIKA HOLDING DL 01 and Boiron SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.