Correlation Between Playtika Holding and PACCAR

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

Diversification Opportunities for Playtika Holding and PACCAR

0.63

Correlation Coefficient

Playtika Holding  PACCAR

Poor diversification

The 3 months correlation between Playtika and PACCAR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc 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 PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of Playtika Holding i.e., Playtika Holding and PACCAR go up and down completely randomly.

Pair Corralation between Playtika Holding and PACCAR

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the PACCAR. In addition to that, Playtika Holding is 1.59 times more volatile than PACCAR Inc. It trades about -0.02 of its total potential returns per unit of risk. PACCAR Inc is currently generating about 0.08 per unit of volatility. If you would invest  6,069  in PACCAR Inc on October 11, 2024 and sell it today you would earn a total of  4,781  from holding PACCAR Inc or generate 78.78% return on investment over 90 days.

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

Playtika Holding Corp  vs.  PACCAR Inc

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.

PACCAR Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PACCAR is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Playtika Holding and PACCAR

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

The idea behind Playtika Holding Corp and PACCAR Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.