Correlation Between Playtika Holding and Centessa Pharmaceuticals

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

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

Diversification Opportunities for Playtika Holding and Centessa Pharmaceuticals

0.68

Correlation Coefficient

Playtika Holding  Centessa Pharmaceuticals

Poor diversification

The 3 months correlation between Playtika and Centessa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals 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 Corp are associated (or correlated) with Centessa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centessa Pharmaceuticals has no effect on the direction of Playtika Holding i.e., Playtika Holding and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Playtika Holding and Centessa Pharmaceuticals

Given the investment horizon of 90 days Playtika Holding is expected to generate 2.81 times less return on investment than Centessa Pharmaceuticals. But when comparing it to its historical volatility, Playtika Holding Corp is 1.92 times less risky than Centessa Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Centessa Pharmaceuticals PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,646  in Centessa Pharmaceuticals PLC on September 15, 2024 and sell it today you would earn a total of  11.00  from holding Centessa Pharmaceuticals PLC or generate 0.67% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Centessa Pharmaceuticals PLC

Playtika Holding Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Playtika Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Centessa Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Centessa Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Playtika Holding and Centessa Pharmaceuticals

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

The idea behind Playtika Holding Corp and Centessa Pharmaceuticals PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..