Correlation Between FormFactor and Playtika Holding

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

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

Diversification Opportunities for FormFactor and Playtika Holding

-0.58

Correlation Coefficient

FormFactor  Playtika Holding

Excellent diversification

The 3 months correlation between FormFactor and Playtika is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor 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 FormFactor 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 FormFactor 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 FormFactor i.e., FormFactor and Playtika Holding go up and down completely randomly.

Pair Corralation between FormFactor and Playtika Holding

Given the investment horizon of 90 days FormFactor is expected to under-perform the Playtika Holding. In addition to that, FormFactor is 2.19 times more volatile than Playtika Holding Corp. It trades about -0.04 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.15 per unit of volatility. If you would invest  734.00  in Playtika Holding Corp on September 2, 2024 and sell it today you would earn a total of  108.00  from holding Playtika Holding Corp or generate 14.71% return on investment over 90 days.

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

FormFactor  vs.  Playtika Holding Corp

FormFactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Playtika Holding Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FormFactor and Playtika Holding

The main advantage of trading using opposite FormFactor and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormFactor 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 FormFactor 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.