Correlation Between Citigroup and Playtika Holding

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

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

Diversification Opportunities for Citigroup and Playtika Holding

-0.58

Correlation Coefficient

Citigroup  Playtika Holding

Excellent diversification

The 3 months correlation between Citigroup and Playtika is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup 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 Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Playtika Holding go up and down completely randomly.

Pair Corralation between Citigroup and Playtika Holding

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Playtika Holding. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.34 times less risky than Playtika Holding. The stock trades about -0.1 of its potential returns per unit of risk. The Playtika Holding Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Playtika Holding Corp on January 20, 2024 and sell it today you would lose (12.00) from holding Playtika Holding Corp or give up 1.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Playtika Holding Corp

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Playtika Holding

The main advantage of trading using opposite Citigroup and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.