Correlation Between PLAYTIKA HOLDING and LVMH Moët

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

Diversification Opportunities for PLAYTIKA HOLDING and LVMH Moët

-0.5

Correlation Coefficient

PLAYTIKA HOLDING  LVMH Moët

Very good diversification

The 3 months correlation between PLAYTIKA and LVMH is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Moët. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and LVMH Moët go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and LVMH Moët

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to under-perform the LVMH Moët. In addition to that, PLAYTIKA HOLDING is 1.84 times more volatile than LVMH Mot Hennessy. It trades about -0.43 of its total potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.19 per unit of volatility. If you would invest  60,780  in LVMH Mot Hennessy on October 4, 2024 and sell it today you would earn a total of  2,760  from holding LVMH Mot Hennessy or generate 4.54% 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.  LVMH Mot Hennessy

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 nearly stable basic indicators, PLAYTIKA HOLDING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LVMH Mot Hennessy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LVMH Mot Hennessy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, LVMH Moët is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PLAYTIKA HOLDING and LVMH Moët

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

The idea behind PLAYTIKA HOLDING DL 01 and LVMH Mot Hennessy 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.