Correlation Between Playtika Holding and Tandy Leather

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

Diversification Opportunities for Playtika Holding and Tandy Leather

-0.15

Correlation Coefficient

Playtika Holding  Tandy Leather

Good diversification

The 3 months correlation between Playtika and Tandy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory 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 Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of Playtika Holding i.e., Playtika Holding and Tandy Leather go up and down completely randomly.

Pair Corralation between Playtika Holding and Tandy Leather

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 1.22 times more return on investment than Tandy Leather. However, Playtika Holding is 1.22 times more volatile than Tandy Leather Factory. It trades about 0.01 of its potential returns per unit of risk. Tandy Leather Factory is currently generating about 0.0 per unit of risk. If you would invest  870.00  in Playtika Holding Corp on September 4, 2024 and sell it today you would lose (24.00) from holding Playtika Holding Corp or give up 2.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Playtika Holding Corp  vs.  Tandy Leather Factory

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.

Tandy Leather Factory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tandy Leather Factory has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Tandy Leather is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Playtika Holding and Tandy Leather

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

The idea behind Playtika Holding Corp and Tandy Leather Factory 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.