Correlation Between Playstudios and Katapult Holdings

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

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

Diversification Opportunities for Playstudios and Katapult Holdings

-0.56

Correlation Coefficient

Playstudios  Katapult Holdings

Excellent diversification

The 3 months correlation between Playstudios and Katapult is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios and Katapult Holdings Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katapult Holdings Equity and Playstudios 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 Playstudios are associated (or correlated) with Katapult Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katapult Holdings Equity has no effect on the direction of Playstudios i.e., Playstudios and Katapult Holdings go up and down completely randomly.

Pair Corralation between Playstudios and Katapult Holdings

Given the investment horizon of 90 days Playstudios is expected to under-perform the Katapult Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Playstudios is 6.44 times less risky than Katapult Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Katapult Holdings Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.79  in Katapult Holdings Equity on December 2, 2024 and sell it today you would earn a total of  0.14  from holding Katapult Holdings Equity or generate 17.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Playstudios  vs.  Katapult Holdings Equity

Playstudios

Risk-Adjusted Performance

Very Weak

Over the last 90 days Playstudios has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Playstudios is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Katapult Holdings Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings Equity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katapult Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playstudios and Katapult Holdings

The main advantage of trading using opposite Playstudios and Katapult Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playstudios position performs unexpectedly, Katapult Holdings 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 Katapult Holdings will offset losses from the drop in Katapult Holdings' long position.

The idea behind Playstudios and Katapult Holdings Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.