Correlation Between BTU Metals and Playtika Holding

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

By analyzing existing cross correlation between BTU Metals Corp and Playtika Holding Corp, you can compare the effects of market volatilities on BTU Metals 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 BTU Metals with a short position of Playtika Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Playtika Holding.

Diversification Opportunities for BTU Metals and Playtika Holding

0.41

Correlation Coefficient

BTU Metals  Playtika Holding

Very weak diversification

The 3 months correlation between BTU and Playtika is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp and BTU Metals 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 BTU Metals Corp 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 Corp has no effect on the direction of BTU Metals i.e., BTU Metals and Playtika Holding go up and down completely randomly.

Pair Corralation between BTU Metals and Playtika Holding

Assuming the 90 days horizon BTU Metals Corp is expected to generate 1.66 times more return on investment than Playtika Holding. However, BTU Metals is 1.66 times more volatile than Playtika Holding Corp. It trades about 0.0 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.22 per unit of risk. If you would invest  2.05  in BTU Metals Corp on October 26, 2024 and sell it today you would lose (0.05) from holding BTU Metals Corp or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

BTU Metals Corp  vs.  Playtika Holding Corp

BTU Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BTU Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, BTU Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with BTU Metals and Playtika Holding

The main advantage of trading using opposite BTU Metals and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals 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 BTU Metals Corp and Playtika Holding Corp 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.