Correlation Between IMPERIAL TOBACCO and PLAYTIKA HOLDING
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and PLAYTIKA HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and PLAYTIKA HOLDING.
Diversification Opportunities for IMPERIAL TOBACCO and PLAYTIKA HOLDING
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IMPERIAL and PLAYTIKA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and PLAYTIKA HOLDING go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and PLAYTIKA HOLDING
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.49 times more return on investment than PLAYTIKA HOLDING. However, IMPERIAL TOBACCO is 2.06 times less risky than PLAYTIKA HOLDING. It trades about 0.57 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about 0.19 per unit of risk. If you would invest 2,729 in IMPERIAL TOBACCO on August 30, 2024 and sell it today you would earn a total of 422.00 from holding IMPERIAL TOBACCO or generate 15.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. PLAYTIKA HOLDING DL 01
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| PLAYTIKA HOLDING |
IMPERIAL TOBACCO and PLAYTIKA HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and PLAYTIKA HOLDING
The main advantage of trading using opposite IMPERIAL TOBACCO and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Superior Plus Corp | IMPERIAL TOBACCO vs. SIVERS SEMICONDUCTORS AB |
| PLAYTIKA HOLDING vs. Sea Limited | PLAYTIKA HOLDING vs. Superior Plus Corp | PLAYTIKA HOLDING vs. NMI Holdings | PLAYTIKA HOLDING vs. SIVERS SEMICONDUCTORS AB |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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