Correlation Between Playtika Holding and NL Industries

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

Diversification Opportunities for Playtika Holding and NL Industries

0.09

Correlation Coefficient

Playtika Holding  NL Industries

Significant diversification

The 3 months correlation between Playtika and NL Industries is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Playtika Holding i.e., Playtika Holding and NL Industries go up and down completely randomly.

Pair Corralation between Playtika Holding and NL Industries

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the NL Industries. But the stock apears to be less risky and, when comparing its historical volatility, Playtika Holding Corp is 1.42 times less risky than NL Industries. The stock trades about -0.49 of its potential returns per unit of risk. The NL Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  795.00  in NL Industries on September 30, 2024 and sell it today you would earn a total of  3.00  from holding NL Industries or generate 0.38% return on investment over 90 days.

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

Playtika Holding Corp  vs.  NL Industries

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 inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

NL Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, NL Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Playtika Holding and NL Industries

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

The idea behind Playtika Holding Corp and NL Industries 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.