Correlation Between Sea and PLAYTIKA HOLDING

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

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

Diversification Opportunities for Sea and PLAYTIKA HOLDING

-0.19

Correlation Coefficient

Sea  PLAYTIKA HOLDING

Good diversification

The 3 months correlation between Sea and PLAYTIKA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sea Limited 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 Sea 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 Sea Limited 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 Sea i.e., Sea and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between Sea and PLAYTIKA HOLDING

Assuming the 90 days horizon Sea Limited is expected to generate 0.74 times more return on investment than PLAYTIKA HOLDING. However, Sea Limited is 1.34 times less risky than PLAYTIKA HOLDING. It trades about 0.12 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about -0.12 per unit of risk. If you would invest  10,340  in Sea Limited on December 29, 2024 and sell it today you would earn a total of  1,980  from holding Sea Limited or generate 19.15% return on investment over 90 days.

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

Sea Limited  vs.  PLAYTIKA HOLDING DL 01

Sea Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sea reported solid returns over the last few months and may actually be approaching a breakup point.

PLAYTIKA HOLDING

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sea and PLAYTIKA HOLDING

The main advantage of trading using opposite Sea and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea 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 Sea Limited 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.