Correlation Between Avient Corp and Playtika Holding

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

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

Diversification Opportunities for Avient Corp and Playtika Holding

0.71

Correlation Coefficient

Avient Corp  Playtika Holding

Poor diversification

The 3 months correlation between Avient and Playtika is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp and Avient Corp 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 Avient Corp are associated (or correlated) with Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Avient Corp i.e., Avient Corp and Playtika Holding go up and down completely randomly.

Pair Corralation between Avient Corp and Playtika Holding

Given the investment horizon of 90 days Avient Corp is expected to generate 2.96 times less return on investment than Playtika Holding. In addition to that, Avient Corp is 1.12 times more volatile than Playtika Holding Corp. It trades about 0.03 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.11 per unit of volatility. If you would invest  747.00  in Playtika Holding Corp on September 13, 2024 and sell it today you would earn a total of  73.50  from holding Playtika Holding Corp or generate 9.84% return on investment over 90 days.

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

Avient Corp  vs.  Playtika Holding Corp

Avient Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Avient Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Playtika Holding Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Playtika Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Avient Corp and Playtika Holding

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

The idea behind Avient Corp and Playtika Holding Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.