Correlation Between PLAYTIKA HOLDING and TransAlta

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

Diversification Opportunities for PLAYTIKA HOLDING and TransAlta

0.63

Correlation Coefficient

PLAYTIKA HOLDING  TransAlta

Poor diversification

The 3 months correlation between PLAYTIKA and TransAlta is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and TransAlta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta 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 TransAlta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and TransAlta go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and TransAlta

Assuming the 90 days horizon PLAYTIKA HOLDING is expected to generate 21.26 times less return on investment than TransAlta. But when comparing it to its historical volatility, PLAYTIKA HOLDING DL 01 is 1.2 times less risky than TransAlta. It trades about 0.02 of its potential returns per unit of risk. TransAlta is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  802.00  in TransAlta on September 19, 2024 and sell it today you would earn a total of  498.00  from holding TransAlta or generate 62.09% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  TransAlta

PLAYTIKA HOLDING

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

TransAlta

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TransAlta are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TransAlta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYTIKA HOLDING and TransAlta

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

The idea behind PLAYTIKA HOLDING DL 01 and TransAlta 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.