Correlation Between Playtika Holding and QBE Insurance

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

Diversification Opportunities for Playtika Holding and QBE Insurance

0.52

Correlation Coefficient

Playtika Holding  QBE Insurance

Very weak diversification

The 3 months correlation between Playtika and QBE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Playtika Holding i.e., Playtika Holding and QBE Insurance go up and down completely randomly.

Pair Corralation between Playtika Holding and QBE Insurance

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the QBE Insurance. In addition to that, Playtika Holding is 1.06 times more volatile than QBE Insurance Group. It trades about -0.01 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.06 per unit of volatility. If you would invest  950.00  in QBE Insurance Group on September 19, 2024 and sell it today you would earn a total of  240.00  from holding QBE Insurance Group or generate 25.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.86%
Values	Daily Returns

Playtika Holding Corp  vs.  QBE Insurance Group

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.

QBE Insurance Group

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Playtika Holding and QBE Insurance

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

The idea behind Playtika Holding Corp and QBE Insurance Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.