Correlation Between KRAFT and Playstudios

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

Diversification Opportunities for KRAFT and Playstudios

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between KRAFT and Playstudios is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KRAFT FOODS GROUP and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios and KRAFT 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 KRAFT FOODS GROUP are associated (or correlated) with Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of KRAFT i.e., KRAFT and Playstudios go up and down completely randomly.

Pair Corralation between KRAFT and Playstudios

Assuming the 90 days trading horizon KRAFT FOODS GROUP is expected to generate 0.3 times more return on investment than Playstudios. However, KRAFT FOODS GROUP is 3.3 times less risky than Playstudios. It trades about 0.14 of its potential returns per unit of risk. Playstudios is currently generating about -0.17 per unit of risk. If you would invest  8,985  in KRAFT FOODS GROUP on November 4, 2024 and sell it today you would earn a total of  251.00  from holding KRAFT FOODS GROUP or generate 2.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.91%
ValuesDaily Returns

KRAFT FOODS GROUP  vs.  Playstudios

 Performance 
       Timeline  
KRAFT FOODS GROUP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KRAFT FOODS GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KRAFT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Playstudios 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

KRAFT and Playstudios Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KRAFT and Playstudios

The main advantage of trading using opposite KRAFT and Playstudios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAFT position performs unexpectedly, Playstudios 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 Playstudios will offset losses from the drop in Playstudios' long position.
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The idea behind KRAFT FOODS GROUP and Playstudios 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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