Correlation Between JD Sports and Playtika Holding

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

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

Diversification Opportunities for JD Sports and Playtika Holding

0.14

Correlation Coefficient

JD Sports  Playtika Holding

Average diversification

The 3 months correlation between JDDSF and Playtika is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion 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 JD Sports 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 JD Sports Fashion 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 JD Sports i.e., JD Sports and Playtika Holding go up and down completely randomly.

Pair Corralation between JD Sports and Playtika Holding

Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.06 times more return on investment than Playtika Holding. However, JD Sports is 1.06 times more volatile than Playtika Holding Corp. It trades about 0.0 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.02 per unit of risk. If you would invest  165.00  in JD Sports Fashion on October 5, 2024 and sell it today you would lose (19.00) from holding JD Sports Fashion or give up 11.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

JD Sports Fashion  vs.  Playtika Holding Corp

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JD Sports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 JD Sports and Playtika Holding

The main advantage of trading using opposite JD Sports and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports 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 JD Sports Fashion 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.