Correlation Between Take Two and Playtika Holding

Can any of the company-specific risk be diversified away by investing in both Take Two and Playtika Holding 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 Take Two and Playtika Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Take Two Interactive Software and Playtika Holding Corp, you can compare the effects of market volatilities on Take Two and Playtika Holding 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 Take Two with a short position of Playtika Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Playtika Holding.

Diversification Opportunities for Take Two and Playtika Holding

0.83

Correlation Coefficient

Take Two  Playtika Holding

Very poor diversification

The 3 months correlation between Take and Playtika is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp and Take Two 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 Take Two Interactive Software are associated (or correlated) with Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Take Two i.e., Take Two and Playtika Holding go up and down completely randomly.

Pair Corralation between Take Two and Playtika Holding

Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 0.97 times more return on investment than Playtika Holding. However, Take Two Interactive Software is 1.03 times less risky than Playtika Holding. It trades about 0.21 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.15 per unit of risk. If you would invest  15,590  in Take Two Interactive Software on September 2, 2024 and sell it today you would earn a total of  3,248  from holding Take Two Interactive Software or generate 20.83% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Playtika Holding Corp

Take Two Interactive

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Take Two displayed solid returns over the last few months and may actually be approaching a breakup point.

Playtika Holding Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Playtika Holding

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

The idea behind Take Two Interactive Software and Playtika Holding Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.