Correlation Between Fomento Economico and Playtika Holding

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

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

Diversification Opportunities for Fomento Economico and Playtika Holding

-0.81

Correlation Coefficient

Fomento Economico  Playtika Holding

Pay attention - limited upside

The 3 months correlation between Fomento and Playtika is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano 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 Fomento Economico 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 Fomento Economico Mexicano 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 Fomento Economico i.e., Fomento Economico and Playtika Holding go up and down completely randomly.

Pair Corralation between Fomento Economico and Playtika Holding

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the Playtika Holding. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 1.2 times less risky than Playtika Holding. The stock trades about -0.16 of its potential returns per unit of risk. The Playtika Holding Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  730.00  in Playtika Holding Corp on September 12, 2024 and sell it today you would earn a total of  96.00  from holding Playtika Holding Corp or generate 13.15% return on investment over 90 days.

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

Fomento Economico Mexicano  vs.  Playtika Holding Corp

Fomento Economico

Risk-Adjusted Performance

0 of 100

Very Weak

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

Playtika Holding Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fomento Economico and Playtika Holding

The main advantage of trading using opposite Fomento Economico and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico 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 Fomento Economico Mexicano 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.