Correlation Between Playmates Toys and PLAYTIKA HOLDING

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

By analyzing existing cross correlation between Playmates Toys Limited and PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on Playmates Toys 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 Playmates Toys with a short position of PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and PLAYTIKA HOLDING.

Diversification Opportunities for Playmates Toys and PLAYTIKA HOLDING

-0.37

Correlation Coefficient

Playmates Toys  PLAYTIKA HOLDING

Very good diversification

The 3 months correlation between Playmates and PLAYTIKA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING and Playmates Toys 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 Playmates Toys Limited 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 has no effect on the direction of Playmates Toys i.e., Playmates Toys and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between Playmates Toys and PLAYTIKA HOLDING

Assuming the 90 days horizon Playmates Toys Limited is expected to generate 3.65 times more return on investment than PLAYTIKA HOLDING. However, Playmates Toys is 3.65 times more volatile than PLAYTIKA HOLDING DL 01. It trades about 0.07 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about 0.01 per unit of risk. If you would invest  2.91  in Playmates Toys Limited on October 10, 2024 and sell it today you would earn a total of  3.69  from holding Playmates Toys Limited or generate 126.8% return on investment over 90 days.

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

Playmates Toys Limited  vs.  PLAYTIKA HOLDING DL 01

Playmates Toys

Risk-Adjusted Performance

0 of 100

Very Weak

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

PLAYTIKA HOLDING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYTIKA HOLDING DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAYTIKA HOLDING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Playmates Toys and PLAYTIKA HOLDING

The main advantage of trading using opposite Playmates Toys and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys 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 Playmates Toys Limited and PLAYTIKA HOLDING DL 01 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.