Correlation Between Kaiser Aluminum and Playtika Holding

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

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

Diversification Opportunities for Kaiser Aluminum and Playtika Holding

0.87

Correlation Coefficient

Kaiser Aluminum  Playtika Holding

Very poor diversification

The 3 months correlation between Kaiser and Playtika is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum i.e., Kaiser Aluminum and Playtika Holding go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Playtika Holding

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.73 times more return on investment than Playtika Holding. However, Kaiser Aluminum is 1.73 times more volatile than Playtika Holding Corp. It trades about 0.11 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.14 per unit of risk. If you would invest  6,958  in Kaiser Aluminum on August 31, 2024 and sell it today you would earn a total of  1,208  from holding Kaiser Aluminum or generate 17.36% return on investment over 90 days.

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

Kaiser Aluminum  vs.  Playtika Holding Corp

Kaiser Aluminum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish essential indicators, Kaiser Aluminum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Playtika Holding Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaiser Aluminum and Playtika Holding

The main advantage of trading using opposite Kaiser Aluminum and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum 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 Kaiser Aluminum 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.