Correlation Between Traton SE and PLAYTIKA HOLDING

Can any of the company-specific risk be diversified away by investing in both Traton SE and PLAYTIKA HOLDING 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 Traton SE and PLAYTIKA HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Traton SE and PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on Traton SE and PLAYTIKA HOLDING 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 Traton SE with a short position of PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Traton SE and PLAYTIKA HOLDING.

Diversification Opportunities for Traton SE and PLAYTIKA HOLDING

0.16

Correlation Coefficient

Traton SE  PLAYTIKA HOLDING

Average diversification

The 3 months correlation between Traton and PLAYTIKA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Traton SE and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING and Traton SE 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 Traton SE are associated (or correlated) with PLAYTIKA HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTIKA HOLDING has no effect on the direction of Traton SE i.e., Traton SE and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between Traton SE and PLAYTIKA HOLDING

Assuming the 90 days trading horizon Traton SE is expected to generate 0.78 times more return on investment than PLAYTIKA HOLDING. However, Traton SE is 1.28 times less risky than PLAYTIKA HOLDING. It trades about 0.08 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about 0.01 per unit of risk. If you would invest  1,351  in Traton SE on September 4, 2024 and sell it today you would earn a total of  1,519  from holding Traton SE or generate 112.44% return on investment over 90 days.

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

Traton SE  vs.  PLAYTIKA HOLDING DL 01

Traton SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Traton SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Traton SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PLAYTIKA HOLDING

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PLAYTIKA HOLDING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Traton SE and PLAYTIKA HOLDING

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

The idea behind Traton SE and PLAYTIKA HOLDING DL 01 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.

Check out your portfolio center.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.