Correlation Between Flex and Playtika Holding

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

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

Diversification Opportunities for Flex and Playtika Holding

0.86

Correlation Coefficient

Flex  Playtika Holding

Very poor diversification

The 3 months correlation between Flex and Playtika is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Flex 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 Flex 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 Flex 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 Flex i.e., Flex and Playtika Holding go up and down completely randomly.

Pair Corralation between Flex and Playtika Holding

Given the investment horizon of 90 days Flex is expected to generate 0.68 times more return on investment than Playtika Holding. However, Flex is 1.47 times less risky than Playtika Holding. It trades about -0.07 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.09 per unit of risk. If you would invest  3,863  in Flex on December 28, 2024 and sell it today you would lose (545.00) from holding Flex or give up 14.11% of portfolio value over 90 days.

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

Flex  vs.  Playtika Holding Corp

Flex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Playtika Holding Corp

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Flex and Playtika Holding

The main advantage of trading using opposite Flex and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex 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 Flex 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.