Correlation Between Capcom Co and Playtika Holding

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

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

Diversification Opportunities for Capcom Co and Playtika Holding

-0.12

Correlation Coefficient

Capcom Co  Playtika Holding

Good diversification

The 3 months correlation between Capcom and Playtika is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co Ltd 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 Capcom Co 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 Capcom Co Ltd 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 Capcom Co i.e., Capcom Co and Playtika Holding go up and down completely randomly.

Pair Corralation between Capcom Co and Playtika Holding

Assuming the 90 days horizon Capcom Co Ltd is expected to generate 1.01 times more return on investment than Playtika Holding. However, Capcom Co is 1.01 times more volatile than Playtika Holding Corp. It trades about 0.07 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.02 per unit of risk. If you would invest  816.00  in Capcom Co Ltd on September 4, 2024 and sell it today you would earn a total of  353.00  from holding Capcom Co Ltd or generate 43.26% return on investment over 90 days.

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

Capcom Co Ltd  vs.  Playtika Holding Corp

Capcom Co

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capcom Co Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Capcom Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Playtika Holding Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capcom Co and Playtika Holding

The main advantage of trading using opposite Capcom Co and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capcom Co 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 Capcom Co Ltd 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.

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.