Correlation Between AETNA and Playtika Holding

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

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

Diversification Opportunities for AETNA and Playtika Holding

-0.62

Correlation Coefficient

AETNA  Playtika Holding

Excellent diversification

The 3 months correlation between AETNA and Playtika is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding AETNA INC NEW 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 AETNA 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 AETNA INC NEW 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 AETNA i.e., AETNA and Playtika Holding go up and down completely randomly.

Pair Corralation between AETNA and Playtika Holding

Assuming the 90 days trading horizon AETNA INC NEW is expected to under-perform the Playtika Holding. But the bond apears to be less risky and, when comparing its historical volatility, AETNA INC NEW is 1.09 times less risky than Playtika Holding. The bond trades about -0.06 of its potential returns per unit of risk. The Playtika Holding Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  734.00  in Playtika Holding Corp on September 3, 2024 and sell it today you would earn a total of  108.00  from holding Playtika Holding Corp or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

AETNA INC NEW  vs.  Playtika Holding Corp

AETNA INC NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AETNA INC NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AETNA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Playtika Holding Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 12 (%) 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 AETNA and Playtika Holding

The main advantage of trading using opposite AETNA and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AETNA 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 AETNA INC NEW 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.