Correlation Between Globalfoundries and Playtika Holding

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

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

Diversification Opportunities for Globalfoundries and Playtika Holding

0.49

Correlation Coefficient

Globalfoundries  Playtika Holding

Very weak diversification

The 3 months correlation between Globalfoundries and Playtika is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries 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 Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Playtika Holding go up and down completely randomly.

Pair Corralation between Globalfoundries and Playtika Holding

Considering the 90-day investment horizon Globalfoundries is expected to generate 1.47 times less return on investment than Playtika Holding. In addition to that, Globalfoundries is 2.34 times more volatile than Playtika Holding Corp. It trades about 0.05 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.18 per unit of volatility. If you would invest  731.00  in Playtika Holding Corp on September 5, 2024 and sell it today you would earn a total of  126.00  from holding Playtika Holding Corp or generate 17.24% return on investment over 90 days.

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

Globalfoundries  vs.  Playtika Holding Corp

Globalfoundries

Risk-Adjusted Performance

4 of 100

Insignificant

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

Playtika Holding Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globalfoundries and Playtika Holding

The main advantage of trading using opposite Globalfoundries and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.