Correlation Between Ebro Foods and Evolution Gaming

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

Diversification Opportunities for Ebro Foods and Evolution Gaming

EbroEvolutionDiversified AwayEbroEvolutionDiversified Away100%
0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Ebro and Evolution is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and Ebro Foods 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 Ebro Foods are associated (or correlated) with Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Ebro Foods i.e., Ebro Foods and Evolution Gaming go up and down completely randomly.

Pair Corralation between Ebro Foods and Evolution Gaming

Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.21 times more return on investment than Evolution Gaming. However, Ebro Foods is 4.77 times less risky than Evolution Gaming. It trades about -0.03 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.06 per unit of risk. If you would invest  1,603  in Ebro Foods on October 16, 2024 and sell it today you would lose (17.00) from holding Ebro Foods or give up 1.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ebro Foods  vs.  Evolution Gaming Group

 Performance 
JavaScript chart by amCharts 3.21.15NovDec -15-10-50510
JavaScript chart by amCharts 3.21.150NYH 0RQ6
       Timeline  
Ebro Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ebro Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ebro Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan15.715.815.91616.116.216.316.416.5
Evolution Gaming 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan8008509009501,0001,0501,100

Ebro Foods and Evolution Gaming Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.78-1.33-0.88-0.43-0.01490.390.841.291.742.19 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.150NYH 0RQ6
       Returns  

Pair Trading with Ebro Foods and Evolution Gaming

The main advantage of trading using opposite Ebro Foods and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Evolution Gaming 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 Evolution Gaming will offset losses from the drop in Evolution Gaming's long position.
The idea behind Ebro Foods and Evolution Gaming Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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