Correlation Between PLAYTIKA HOLDING and Coffee Holding

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

Diversification Opportunities for PLAYTIKA HOLDING and Coffee Holding

0.37

Correlation Coefficient

PLAYTIKA HOLDING  Coffee Holding

Weak diversification

The 3 months correlation between PLAYTIKA and Coffee is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding 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 Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Coffee Holding go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and Coffee Holding

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the Coffee Holding. But the stock apears to be less risky and, when comparing its historical volatility, PLAYTIKA HOLDING DL 01 is 2.01 times less risky than Coffee Holding. The stock trades about 0.0 of its potential returns per unit of risk. The Coffee Holding Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Coffee Holding Co on September 30, 2024 and sell it today you would earn a total of  172.00  from holding Coffee Holding Co or generate 88.66% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  Coffee Holding Co

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 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.

Coffee Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Holding Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Coffee Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYTIKA HOLDING and Coffee Holding

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

The idea behind PLAYTIKA HOLDING DL 01 and Coffee Holding Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.