Correlation Between PLAYTIKA HOLDING and NEXTDC

Can any of the company-specific risk be diversified away by investing in both PLAYTIKA HOLDING and NEXTDC 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 NEXTDC 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 NEXTDC LTD, you can compare the effects of market volatilities on PLAYTIKA HOLDING and NEXTDC 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 NEXTDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and NEXTDC.

Diversification Opportunities for PLAYTIKA HOLDING and NEXTDC

-0.54

Correlation Coefficient

PLAYTIKA HOLDING  NEXTDC

Excellent diversification

The 3 months correlation between PLAYTIKA and NEXTDC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and NEXTDC LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTDC LTD 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 NEXTDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTDC LTD has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and NEXTDC go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and NEXTDC

Assuming the 90 days horizon PLAYTIKA HOLDING is expected to generate 2.26 times less return on investment than NEXTDC. In addition to that, PLAYTIKA HOLDING is 1.11 times more volatile than NEXTDC LTD. It trades about 0.02 of its total potential returns per unit of risk. NEXTDC LTD is currently generating about 0.05 per unit of volatility. If you would invest  560.00  in NEXTDC LTD on September 18, 2024 and sell it today you would earn a total of  330.00  from holding NEXTDC LTD or generate 58.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

PLAYTIKA HOLDING DL 01  vs.  NEXTDC LTD

PLAYTIKA HOLDING

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PLAYTIKA HOLDING reported solid returns over the last few months and may actually be approaching a breakup point.

NEXTDC LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEXTDC LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PLAYTIKA HOLDING and NEXTDC

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

The idea behind PLAYTIKA HOLDING DL 01 and NEXTDC LTD 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.