Correlation Between GMS and Playtika Holding

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

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

Diversification Opportunities for GMS and Playtika Holding

0.88

Correlation Coefficient

GMS  Playtika Holding

Very poor diversification

The 3 months correlation between GMS and Playtika is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc 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 GMS 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 GMS Inc 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 GMS i.e., GMS and Playtika Holding go up and down completely randomly.

Pair Corralation between GMS and Playtika Holding

Considering the 90-day investment horizon GMS Inc is expected to generate 0.53 times more return on investment than Playtika Holding. However, GMS Inc is 1.89 times less risky than Playtika Holding. It trades about -0.24 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.25 per unit of risk. If you would invest  10,013  in GMS Inc on December 1, 2024 and sell it today you would lose (2,052) from holding GMS Inc or give up 20.49% of portfolio value over 90 days.

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

GMS Inc  vs.  Playtika Holding Corp

GMS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 GMS and Playtika Holding

The main advantage of trading using opposite GMS and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.