Correlation Between Weibo Corp and Playtika Holding

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

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

Diversification Opportunities for Weibo Corp and Playtika Holding

-0.31

Correlation Coefficient

Weibo Corp  Playtika Holding

Very good diversification

The 3 months correlation between Weibo and Playtika is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp 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 Weibo Corp 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 Weibo Corp 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 Weibo Corp i.e., Weibo Corp and Playtika Holding go up and down completely randomly.

Pair Corralation between Weibo Corp and Playtika Holding

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Playtika Holding. In addition to that, Weibo Corp is 1.24 times more volatile than Playtika Holding Corp. It trades about -0.03 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.02 per unit of volatility. If you would invest  983.00  in Playtika Holding Corp on September 27, 2024 and sell it today you would lose (303.00) from holding Playtika Holding Corp or give up 30.82% of portfolio value over 90 days.

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

Weibo Corp  vs.  Playtika Holding Corp

Weibo Corp

Risk-Adjusted Performance

1 of 100

Insignificant

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

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Weibo Corp and Playtika Holding

The main advantage of trading using opposite Weibo Corp and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp 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 Weibo Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.