Correlation Between Playtika Holding and Reservoir Media

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

Diversification Opportunities for Playtika Holding and Reservoir Media

0.26

Correlation Coefficient

Playtika Holding  Reservoir Media

Modest diversification

The 3 months correlation between Playtika and Reservoir is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media 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 Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of Playtika Holding i.e., Playtika Holding and Reservoir Media go up and down completely randomly.

Pair Corralation between Playtika Holding and Reservoir Media

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the Reservoir Media. But the stock apears to be less risky and, when comparing its historical volatility, Playtika Holding Corp is 1.28 times less risky than Reservoir Media. The stock trades about -0.01 of its potential returns per unit of risk. The Reservoir Media is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  743.00  in Reservoir Media on October 2, 2024 and sell it today you would earn a total of  161.00  from holding Reservoir Media or generate 21.67% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Reservoir Media

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.

Reservoir Media

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playtika Holding and Reservoir Media

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

The idea behind Playtika Holding Corp and Reservoir Media 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.