Correlation Between Grocery Outlet and Playtika Holding

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

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

Diversification Opportunities for Grocery Outlet and Playtika Holding

0.66

Correlation Coefficient

Grocery Outlet  Playtika Holding

Poor diversification

The 3 months correlation between Grocery and Playtika is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding 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 Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Playtika Holding go up and down completely randomly.

Pair Corralation between Grocery Outlet and Playtika Holding

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Playtika Holding. In addition to that, Grocery Outlet is 1.36 times more volatile than Playtika Holding Corp. It trades about -0.44 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.5 per unit of volatility. If you would invest  862.00  in Playtika Holding Corp on September 26, 2024 and sell it today you would lose (177.00) from holding Playtika Holding Corp or give up 20.53% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  Playtika Holding Corp

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

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

Pair Trading with Grocery Outlet and Playtika Holding

The main advantage of trading using opposite Grocery Outlet and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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 Grocery Outlet Holding 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 CEOs Directory module to screen CEOs from public companies around the world.