Correlation Between Playtika Holding and Tower Semiconductor

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

Diversification Opportunities for Playtika Holding and Tower Semiconductor

0.78

Correlation Coefficient

Playtika Holding  Tower Semiconductor

Poor diversification

The 3 months correlation between Playtika and Tower is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Playtika Holding i.e., Playtika Holding and Tower Semiconductor go up and down completely randomly.

Pair Corralation between Playtika Holding and Tower Semiconductor

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the Tower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Playtika Holding Corp is 1.05 times less risky than Tower Semiconductor. The stock trades about -0.22 of its potential returns per unit of risk. The Tower Semiconductor is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  5,055  in Tower Semiconductor on December 19, 2024 and sell it today you would lose (1,239) from holding Tower Semiconductor or give up 24.51% of portfolio value over 90 days.

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

Playtika Holding Corp  vs.  Tower Semiconductor

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.

Tower Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tower Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Playtika Holding and Tower Semiconductor

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

The idea behind Playtika Holding Corp and Tower Semiconductor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.