Correlation Between Playtika Holding and Take Two

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

Diversification Opportunities for Playtika Holding and Take Two

0.84

Correlation Coefficient

Playtika Holding  Take Two

Very poor diversification

The 3 months correlation between Playtika and Take is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Playtika Holding i.e., Playtika Holding and Take Two go up and down completely randomly.

Pair Corralation between Playtika Holding and Take Two

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the Take Two. In addition to that, Playtika Holding is 1.21 times more volatile than Take Two Interactive Software. It trades about -0.01 of its total potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.07 per unit of volatility. If you would invest  16,567  in Take Two Interactive Software on September 4, 2024 and sell it today you would earn a total of  2,228  from holding Take Two Interactive Software or generate 13.45% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Take Two Interactive Software

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.

Take Two Interactive

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Take Two displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playtika Holding and Take Two

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

The idea behind Playtika Holding Corp and Take Two Interactive Software 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.