Correlation Between PLAYTIKA HOLDING and GMO Internet

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

Diversification Opportunities for PLAYTIKA HOLDING and GMO Internet

0.38

Correlation Coefficient

PLAYTIKA HOLDING  GMO Internet

Weak diversification

The 3 months correlation between PLAYTIKA and GMO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and GMO Internet go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and GMO Internet

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the GMO Internet. In addition to that, PLAYTIKA HOLDING is 1.51 times more volatile than GMO Internet. It trades about -0.05 of its total potential returns per unit of risk. GMO Internet is currently generating about 0.06 per unit of volatility. If you would invest  1,530  in GMO Internet on October 1, 2024 and sell it today you would earn a total of  80.00  from holding GMO Internet or generate 5.23% 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.  GMO Internet

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 weak 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.

GMO Internet

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMO Internet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GMO Internet 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 GMO Internet

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

The idea behind PLAYTIKA HOLDING DL 01 and GMO Internet 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.