Correlation Between PLAYTIKA HOLDING and Microsoft

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

Diversification Opportunities for PLAYTIKA HOLDING and Microsoft

0.43

Correlation Coefficient

PLAYTIKA HOLDING  Microsoft

Very weak diversification

The 3 months correlation between PLAYTIKA and Microsoft is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Microsoft go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and Microsoft

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to generate 1.91 times more return on investment than Microsoft. However, PLAYTIKA HOLDING is 1.91 times more volatile than Microsoft. It trades about 0.02 of its potential returns per unit of risk. Microsoft is currently generating about 0.04 per unit of risk. If you would invest  613.00  in PLAYTIKA HOLDING DL 01 on October 2, 2024 and sell it today you would earn a total of  27.00  from holding PLAYTIKA HOLDING DL 01 or generate 4.4% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  Microsoft

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.

Microsoft

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PLAYTIKA HOLDING and Microsoft

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

The idea behind PLAYTIKA HOLDING DL 01 and Microsoft 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.