Correlation Between GAMING FAC and International Game

Can any of the company-specific risk be diversified away by investing in both GAMING FAC and International Game 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 GAMING FAC and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GAMING FAC SA and International Game Technology, you can compare the effects of market volatilities on GAMING FAC and International Game 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 GAMING FAC with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and International Game.

Diversification Opportunities for GAMING FAC and International Game

-0.24

Correlation Coefficient

GAMING FAC  International Game

Very good diversification

The 3 months correlation between GAMING and International is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and GAMING FAC 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 GAMING FAC SA are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of GAMING FAC i.e., GAMING FAC and International Game go up and down completely randomly.

Pair Corralation between GAMING FAC and International Game

Assuming the 90 days horizon GAMING FAC SA is expected to generate 2.27 times more return on investment than International Game. However, GAMING FAC is 2.27 times more volatile than International Game Technology. It trades about 0.15 of its potential returns per unit of risk. International Game Technology is currently generating about -0.05 per unit of risk. If you would invest  154.00  in GAMING FAC SA on December 25, 2024 and sell it today you would earn a total of  58.00  from holding GAMING FAC SA or generate 37.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GAMING FAC SA  vs.  International Game Technology

GAMING FAC SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GAMING FAC SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GAMING FAC reported solid returns over the last few months and may actually be approaching a breakup point.

International Game

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, International Game is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GAMING FAC and International Game

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

The idea behind GAMING FAC SA and International Game Technology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.