Correlation Between PLAYTIKA HOLDING and Suzano SA

Can any of the company-specific risk be diversified away by investing in both PLAYTIKA HOLDING and Suzano 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 Suzano 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 Suzano SA, you can compare the effects of market volatilities on PLAYTIKA HOLDING and Suzano 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 Suzano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and Suzano SA.

Diversification Opportunities for PLAYTIKA HOLDING and Suzano SA

0.8

Correlation Coefficient

PLAYTIKA HOLDING  Suzano SA

Very poor diversification

The 3 months correlation between PLAYTIKA and Suzano is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano 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 Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Suzano SA go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and Suzano SA

Assuming the 90 days horizon PLAYTIKA HOLDING is expected to generate 19.35 times less return on investment than Suzano SA. In addition to that, PLAYTIKA HOLDING is 1.28 times more volatile than Suzano SA. It trades about 0.01 of its total potential returns per unit of risk. Suzano SA is currently generating about 0.16 per unit of volatility. If you would invest  802.00  in Suzano SA on September 20, 2024 and sell it today you would earn a total of  153.00  from holding Suzano SA or generate 19.08% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  Suzano SA

PLAYTIKA HOLDING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYTIKA HOLDING DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAYTIKA HOLDING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Suzano SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suzano SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Suzano SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYTIKA HOLDING and Suzano SA

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

The idea behind PLAYTIKA HOLDING DL 01 and Suzano 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.