Correlation Between Playtika Holding and Air Transport

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

Diversification Opportunities for Playtika Holding and Air Transport

0.75

Correlation Coefficient

Playtika Holding  Air Transport

Poor diversification

The 3 months correlation between Playtika and Air is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Playtika Holding i.e., Playtika Holding and Air Transport go up and down completely randomly.

Pair Corralation between Playtika Holding and Air Transport

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 1.15 times more return on investment than Air Transport. However, Playtika Holding is 1.15 times more volatile than Air Transport Services. It trades about 0.12 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.02 per unit of risk. If you would invest  685.00  in Playtika Holding Corp on February 26, 2024 and sell it today you would earn a total of  161.00  from holding Playtika Holding Corp or generate 23.5% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Air Transport Services

Playtika Holding Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 9 (%) 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.

Air Transport Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Playtika Holding and Air Transport

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

The idea behind Playtika Holding Corp and Air Transport Services 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.