Correlation Between RADIATE and Playtika Holding

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

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

Diversification Opportunities for RADIATE and Playtika Holding

0.1

Correlation Coefficient

RADIATE  Playtika Holding

Average diversification

The 3 months correlation between RADIATE and Playtika is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding RADIATE HOLDCO LLC 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 RADIATE 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 RADIATE HOLDCO LLC 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 RADIATE i.e., RADIATE and Playtika Holding go up and down completely randomly.

Pair Corralation between RADIATE and Playtika Holding

Assuming the 90 days trading horizon RADIATE HOLDCO LLC is expected to under-perform the Playtika Holding. In addition to that, RADIATE is 4.48 times more volatile than Playtika Holding Corp. It trades about -0.39 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.28 per unit of volatility. If you would invest  845.00  in Playtika Holding Corp on September 17, 2024 and sell it today you would lose (96.50) from holding Playtika Holding Corp or give up 11.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

RADIATE HOLDCO LLC  vs.  Playtika Holding Corp

RADIATE HOLDCO LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RADIATE HOLDCO LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for RADIATE HOLDCO LLC investors.

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 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.

Pair Trading with RADIATE and Playtika Holding

The main advantage of trading using opposite RADIATE and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RADIATE 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 RADIATE HOLDCO LLC 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.