Correlation Between PLAYTIKA HOLDING and Guidewire Software

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

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

Diversification Opportunities for PLAYTIKA HOLDING and Guidewire Software

0.67

Correlation Coefficient

PLAYTIKA HOLDING  Guidewire Software

Poor diversification

The 3 months correlation between PLAYTIKA and Guidewire is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Guidewire Software go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and Guidewire Software

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the Guidewire Software. In addition to that, PLAYTIKA HOLDING is 1.18 times more volatile than Guidewire Software. It trades about -0.01 of its total potential returns per unit of risk. Guidewire Software is currently generating about 0.1 per unit of volatility. If you would invest  6,650  in Guidewire Software on October 23, 2024 and sell it today you would earn a total of  10,555  from holding Guidewire Software or generate 158.72% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  Guidewire Software

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Guidewire Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Guidewire Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PLAYTIKA HOLDING and Guidewire Software

The main advantage of trading using opposite PLAYTIKA HOLDING and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTIKA HOLDING position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.

The idea behind PLAYTIKA HOLDING DL 01 and Guidewire Software 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..