Correlation Between SOUTHERN and Playtika Holding

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

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

Diversification Opportunities for SOUTHERN and Playtika Holding

-0.25

Correlation Coefficient

SOUTHERN  Playtika Holding

Very good diversification

The 3 months correlation between SOUTHERN and Playtika is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER CORP 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 SOUTHERN 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 SOUTHERN PER CORP 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 SOUTHERN i.e., SOUTHERN and Playtika Holding go up and down completely randomly.

Pair Corralation between SOUTHERN and Playtika Holding

Assuming the 90 days trading horizon SOUTHERN is expected to generate 8.47 times less return on investment than Playtika Holding. But when comparing it to its historical volatility, SOUTHERN PER CORP is 2.11 times less risky than Playtika Holding. It trades about 0.0 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  819.00  in Playtika Holding Corp on September 20, 2024 and sell it today you would lose (72.00) from holding Playtika Holding Corp or give up 8.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.34%
Values	Daily Returns

SOUTHERN PER CORP  vs.  Playtika Holding Corp

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SOUTHERN and Playtika Holding

The main advantage of trading using opposite SOUTHERN and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHERN 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 SOUTHERN PER CORP 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.