Correlation Between Playtika Holding and KVH Industries

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

Diversification Opportunities for Playtika Holding and KVH Industries

0.42

Correlation Coefficient

Playtika Holding  KVH Industries

Very weak diversification

The 3 months correlation between Playtika and KVH is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Playtika Holding i.e., Playtika Holding and KVH Industries go up and down completely randomly.

Pair Corralation between Playtika Holding and KVH Industries

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 1.47 times more return on investment than KVH Industries. However, Playtika Holding is 1.47 times more volatile than KVH Industries. It trades about -0.21 of its potential returns per unit of risk. KVH Industries is currently generating about -0.42 per unit of risk. If you would invest  883.00  in Playtika Holding Corp on March 19, 2024 and sell it today you would lose (56.00) from holding Playtika Holding Corp or give up 6.34% of portfolio value over 90 days.

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

Playtika Holding Corp  vs.  KVH Industries

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 abnormal basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

KVH Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KVH Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, KVH Industries is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Playtika Holding and KVH Industries

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

The idea behind Playtika Holding Corp and KVH Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.