Correlation Between HE Equipment and Playtika Holding

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

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

Diversification Opportunities for HE Equipment and Playtika Holding

0.9

Correlation Coefficient

HE Equipment  Playtika Holding

Almost no diversification

The 3 months correlation between HEES and Playtika is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Playtika Holding go up and down completely randomly.

Pair Corralation between HE Equipment and Playtika Holding

Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the Playtika Holding. But the stock apears to be less risky and, when comparing its historical volatility, HE Equipment Services is 1.19 times less risky than Playtika Holding. The stock trades about -0.61 of its potential returns per unit of risk. The Playtika Holding Corp is currently generating about -0.4 of returns per unit of risk over similar time horizon. If you would invest  822.00  in Playtika Holding Corp on October 13, 2024 and sell it today you would lose (145.00) from holding Playtika Holding Corp or give up 17.64% of portfolio value over 90 days.

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

HE Equipment Services  vs.  Playtika Holding Corp

HE Equipment Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HE Equipment Services 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 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

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 latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with HE Equipment and Playtika Holding

The main advantage of trading using opposite HE Equipment and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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 HE Equipment Services 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.