Correlation Between TKO Group and Playtika Holding

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Can any of the company-specific risk be diversified away by investing in both TKO Group 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 TKO Group and Playtika Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKO Group Holdings, and Playtika Holding Corp, you can compare the effects of market volatilities on TKO Group 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 TKO Group with a short position of Playtika Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKO Group and Playtika Holding.

Diversification Opportunities for TKO Group and Playtika Holding

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between TKO and Playtika is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding TKO Group Holdings, 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 TKO Group 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 TKO Group Holdings, 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 TKO Group i.e., TKO Group and Playtika Holding go up and down completely randomly.

Pair Corralation between TKO Group and Playtika Holding

Considering the 90-day investment horizon TKO Group Holdings, is expected to generate 1.57 times more return on investment than Playtika Holding. However, TKO Group is 1.57 times more volatile than Playtika Holding Corp. It trades about 0.39 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.05 per unit of risk. If you would invest  11,904  in TKO Group Holdings, on September 12, 2024 and sell it today you would earn a total of  2,196  from holding TKO Group Holdings, or generate 18.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

TKO Group Holdings,  vs.  Playtika Holding Corp

 Performance 
       Timeline  
TKO Group Holdings, 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, TKO Group displayed solid returns over the last few months and may actually be approaching a breakup point.
Playtika Holding Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 10 (%) 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.

TKO Group and Playtika Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TKO Group and Playtika Holding

The main advantage of trading using opposite TKO Group and Playtika Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKO Group 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 TKO Group Holdings, 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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