Correlation Between Entain Plc and Sands China

Can any of the company-specific risk be diversified away by investing in both Entain Plc and Sands China 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 Entain Plc and Sands China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entain Plc and Sands China, you can compare the effects of market volatilities on Entain Plc and Sands China 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 Entain Plc with a short position of Sands China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entain Plc and Sands China.

Diversification Opportunities for Entain Plc and Sands China

0.23

Correlation Coefficient

Entain Plc  Sands China

Modest diversification

The 3 months correlation between Entain and Sands is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Entain Plc and Sands China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands China and Entain Plc 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 Entain Plc are associated (or correlated) with Sands China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands China has no effect on the direction of Entain Plc i.e., Entain Plc and Sands China go up and down completely randomly.

Pair Corralation between Entain Plc and Sands China

Assuming the 90 days horizon Entain Plc is expected to generate 2.54 times less return on investment than Sands China. But when comparing it to its historical volatility, Entain Plc is 1.17 times less risky than Sands China. It trades about 0.03 of its potential returns per unit of risk. Sands China is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Sands China on October 2, 2024 and sell it today you would earn a total of  59.00  from holding Sands China or generate 30.41% return on investment over 90 days.

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

Entain Plc  vs.  Sands China

Entain Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entain Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sands China

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sands China are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sands China reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entain Plc and Sands China

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

The idea behind Entain Plc and Sands China 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.