Correlation Between Playtika Holding and Shoals Technologies

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

Diversification Opportunities for Playtika Holding and Shoals Technologies

-0.4

Correlation Coefficient

Playtika Holding  Shoals Technologies

Very good diversification

The 3 months correlation between Playtika and Shoals is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies 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 Shoals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoals Technologies has no effect on the direction of Playtika Holding i.e., Playtika Holding and Shoals Technologies go up and down completely randomly.

Pair Corralation between Playtika Holding and Shoals Technologies

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 0.39 times more return on investment than Shoals Technologies. However, Playtika Holding Corp is 2.55 times less risky than Shoals Technologies. It trades about 0.01 of its potential returns per unit of risk. Shoals Technologies Group is currently generating about -0.1 per unit of risk. If you would invest  759.00  in Playtika Holding Corp on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Playtika Holding Corp or generate 0.53% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Shoals Technologies Group

Playtika Holding Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Playtika Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Shoals Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shoals Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Playtika Holding and Shoals Technologies

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

The idea behind Playtika Holding Corp and Shoals Technologies 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.