Correlation Between PLAYTIKA HOLDING and Volkswagen

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

Diversification Opportunities for PLAYTIKA HOLDING and Volkswagen

-0.83

Correlation Coefficient

PLAYTIKA HOLDING  Volkswagen

Pay attention - limited upside

The 3 months correlation between PLAYTIKA and Volkswagen is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and Volkswagen AG VZO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG VZO 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG VZO has no effect on the direction of PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and Volkswagen go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and Volkswagen

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to generate 1.74 times more return on investment than Volkswagen. However, PLAYTIKA HOLDING is 1.74 times more volatile than Volkswagen AG VZO. It trades about -0.03 of its potential returns per unit of risk. Volkswagen AG VZO is currently generating about -0.1 per unit of risk. If you would invest  695.00  in PLAYTIKA HOLDING DL 01 on September 28, 2024 and sell it today you would lose (45.00) from holding PLAYTIKA HOLDING DL 01 or give up 6.47% of portfolio value over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  Volkswagen AG VZO

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.

Volkswagen AG VZO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG VZO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with PLAYTIKA HOLDING and Volkswagen

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

The idea behind PLAYTIKA HOLDING DL 01 and Volkswagen AG VZO 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.