Correlation Between Playtika Holding and BTU Metals

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

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

Diversification Opportunities for Playtika Holding and BTU Metals

0.45

Correlation Coefficient

Playtika Holding  BTU Metals

Very weak diversification

The 3 months correlation between Playtika and BTU is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp and Playtika Holding 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 Playtika Holding Corp are associated (or correlated) with BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of Playtika Holding i.e., Playtika Holding and BTU Metals go up and down completely randomly.

Pair Corralation between Playtika Holding and BTU Metals

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the BTU Metals. But the stock apears to be less risky and, when comparing its historical volatility, Playtika Holding Corp is 1.74 times less risky than BTU Metals. The stock trades about -0.24 of its potential returns per unit of risk. The BTU Metals Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2.05  in BTU Metals Corp on October 11, 2024 and sell it today you would lose (0.05) from holding BTU Metals Corp or give up 2.44% of portfolio value over 90 days.

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

Playtika Holding Corp  vs.  BTU Metals Corp

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.

BTU Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Playtika Holding and BTU Metals

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

The idea behind Playtika Holding Corp and BTU Metals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.