Correlation Between Playtika Holding and Square Enix

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

Diversification Opportunities for Playtika Holding and Square Enix

-0.74

Correlation Coefficient

Playtika Holding  Square Enix

Pay attention - limited upside

The 3 months correlation between Playtika and Square is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Square Enix Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Square Enix Holdings 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 Square Enix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Square Enix Holdings has no effect on the direction of Playtika Holding i.e., Playtika Holding and Square Enix go up and down completely randomly.

Pair Corralation between Playtika Holding and Square Enix

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the Square Enix. In addition to that, Playtika Holding is 1.4 times more volatile than Square Enix Holdings. It trades about -0.06 of its total potential returns per unit of risk. Square Enix Holdings is currently generating about 0.08 per unit of volatility. If you would invest  4,080  in Square Enix Holdings on December 27, 2024 and sell it today you would earn a total of  533.00  from holding Square Enix Holdings or generate 13.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Playtika Holding Corp  vs.  Square Enix Holdings

Playtika Holding Corp

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Square Enix Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Square Enix Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Square Enix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playtika Holding and Square Enix

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

The idea behind Playtika Holding Corp and Square Enix Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..