Correlation Between PLAYTIKA HOLDING and Flowers Foods

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

Diversification Opportunities for PLAYTIKA HOLDING and Flowers Foods

0.54
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between PLAYTIKA HOLDING and Flowers Foods

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the Flowers Foods. In addition to that, PLAYTIKA HOLDING is 1.68 times more volatile than Flowers Foods. It trades about -0.33 of its total potential returns per unit of risk. Flowers Foods is currently generating about -0.06 per unit of volatility. If you would invest  2,060  in Flowers Foods on October 10, 2024 and sell it today you would lose (40.00) from holding Flowers Foods or give up 1.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PLAYTIKA HOLDING DL 01  vs.  Flowers Foods

 Performance 
       Timeline  
PLAYTIKA HOLDING 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Flowers Foods 

Risk-Adjusted Performance

0 of 100

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

PLAYTIKA HOLDING and Flowers Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PLAYTIKA HOLDING and Flowers Foods

The main advantage of trading using opposite PLAYTIKA HOLDING and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTIKA HOLDING position performs unexpectedly, Flowers Foods 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.
The idea behind PLAYTIKA HOLDING DL 01 and Flowers Foods 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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