Correlation Between Playtika Holding and Gerdau SA

Can any of the company-specific risk be diversified away by investing in both Playtika Holding and Gerdau SA 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 Gerdau SA 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 Gerdau SA ADR, you can compare the effects of market volatilities on Playtika Holding and Gerdau SA 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 Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtika Holding and Gerdau SA.

Diversification Opportunities for Playtika Holding and Gerdau SA

0.73

Correlation Coefficient

Playtika Holding  Gerdau SA

Poor diversification

The 3 months correlation between Playtika and Gerdau is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR 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 Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of Playtika Holding i.e., Playtika Holding and Gerdau SA go up and down completely randomly.

Pair Corralation between Playtika Holding and Gerdau SA

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the Gerdau SA. In addition to that, Playtika Holding is 1.16 times more volatile than Gerdau SA ADR. It trades about -0.02 of its total potential returns per unit of risk. Gerdau SA ADR is currently generating about -0.01 per unit of volatility. If you would invest  346.00  in Gerdau SA ADR on October 5, 2024 and sell it today you would lose (58.00) from holding Gerdau SA ADR or give up 16.76% of portfolio value over 90 days.

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

Playtika Holding Corp  vs.  Gerdau SA ADR

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.

Gerdau SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gerdau SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Playtika Holding and Gerdau SA

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

The idea behind Playtika Holding Corp and Gerdau SA ADR 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.