Correlation Between Century Aluminum and PLAYTIKA HOLDING

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

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

Diversification Opportunities for Century Aluminum and PLAYTIKA HOLDING

0.74

Correlation Coefficient

Century Aluminum  PLAYTIKA HOLDING

Poor diversification

The 3 months correlation between Century and PLAYTIKA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum 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 Century Aluminum 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 Century Aluminum 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 Century Aluminum i.e., Century Aluminum and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between Century Aluminum and PLAYTIKA HOLDING

Assuming the 90 days horizon Century Aluminum is expected to generate 1.52 times more return on investment than PLAYTIKA HOLDING. However, Century Aluminum is 1.52 times more volatile than PLAYTIKA HOLDING DL 01. It trades about 0.05 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  1,000.00  in Century Aluminum on October 26, 2024 and sell it today you would earn a total of  876.00  from holding Century Aluminum or generate 87.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Century Aluminum  vs.  PLAYTIKA HOLDING DL 01

Century Aluminum

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Century Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Century Aluminum and PLAYTIKA HOLDING

The main advantage of trading using opposite Century Aluminum and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum 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 Century Aluminum 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.