Correlation Between PLAYTIKA HOLDING and GEAR4MUSIC

Can any of the company-specific risk be diversified away by investing in both PLAYTIKA HOLDING and GEAR4MUSIC 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 GEAR4MUSIC 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 GEAR4MUSIC LS 10, you can compare the effects of market volatilities on PLAYTIKA HOLDING and GEAR4MUSIC 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 GEAR4MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and GEAR4MUSIC.

Diversification Opportunities for PLAYTIKA HOLDING and GEAR4MUSIC

-0.55

Correlation Coefficient

PLAYTIKA HOLDING  GEAR4MUSIC

Excellent diversification

The 3 months correlation between PLAYTIKA and GEAR4MUSIC is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC LS 10 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 GEAR4MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC LS 10 has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and GEAR4MUSIC go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and GEAR4MUSIC

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to generate 1.13 times more return on investment than GEAR4MUSIC. However, PLAYTIKA HOLDING is 1.13 times more volatile than GEAR4MUSIC LS 10. It trades about 0.16 of its potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about -0.01 per unit of risk. If you would invest  646.00  in PLAYTIKA HOLDING DL 01 on September 12, 2024 and sell it today you would earn a total of  149.00  from holding PLAYTIKA HOLDING DL 01 or generate 23.07% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  GEAR4MUSIC LS 10

PLAYTIKA HOLDING

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 12 (%) 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.

GEAR4MUSIC LS 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEAR4MUSIC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GEAR4MUSIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PLAYTIKA HOLDING and GEAR4MUSIC

The main advantage of trading using opposite PLAYTIKA HOLDING and GEAR4MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTIKA HOLDING position performs unexpectedly, GEAR4MUSIC 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 GEAR4MUSIC will offset losses from the drop in GEAR4MUSIC's long position.

The idea behind PLAYTIKA HOLDING DL 01 and GEAR4MUSIC LS 10 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.