Correlation Between Japan Post and PLAYTIKA HOLDING

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

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

Diversification Opportunities for Japan Post and PLAYTIKA HOLDING

0.65

Correlation Coefficient

Japan Post  PLAYTIKA HOLDING

Poor diversification

The 3 months correlation between Japan and PLAYTIKA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance 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 Japan Post 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 Japan Post Insurance 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 Japan Post i.e., Japan Post and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between Japan Post and PLAYTIKA HOLDING

Assuming the 90 days trading horizon Japan Post Insurance is expected to generate 0.51 times more return on investment than PLAYTIKA HOLDING. However, Japan Post Insurance is 1.97 times less risky than PLAYTIKA HOLDING. It trades about -0.3 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about -0.33 per unit of risk. If you would invest  1,900  in Japan Post Insurance on October 10, 2024 and sell it today you would lose (140.00) from holding Japan Post Insurance or give up 7.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Japan Post Insurance  vs.  PLAYTIKA HOLDING DL 01

Japan Post Insurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Post Insurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Japan Post may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Japan Post and PLAYTIKA HOLDING

The main advantage of trading using opposite Japan Post and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post 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 Japan Post Insurance 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.