Correlation Between 437076CA8 and Playtika Holding

Can any of the company-specific risk be diversified away by investing in both 437076CA8 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 437076CA8 and Playtika Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HOME DEPOT INC and Playtika Holding Corp, you can compare the effects of market volatilities on 437076CA8 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 437076CA8 with a short position of Playtika Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of 437076CA8 and Playtika Holding.

Diversification Opportunities for 437076CA8 and Playtika Holding

-0.71

Correlation Coefficient

437076CA8  Playtika Holding

Pay attention - limited upside

The 3 months correlation between 437076CA8 and Playtika is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT INC 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 437076CA8 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 HOME DEPOT INC 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 437076CA8 i.e., 437076CA8 and Playtika Holding go up and down completely randomly.

Pair Corralation between 437076CA8 and Playtika Holding

Assuming the 90 days trading horizon HOME DEPOT INC is expected to under-perform the Playtika Holding. But the bond apears to be less risky and, when comparing its historical volatility, HOME DEPOT INC is 3.66 times less risky than Playtika Holding. The bond trades about -0.13 of its potential returns per unit of risk. The Playtika Holding Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. 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 Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

HOME DEPOT INC  vs.  Playtika Holding Corp

HOME DEPOT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOME DEPOT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 437076CA8 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

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 437076CA8 and Playtika Holding

The main advantage of trading using opposite 437076CA8 and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 437076CA8 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 HOME DEPOT INC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.