Correlation Between Aristocrat Leisure and GAMING FAC

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

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

Diversification Opportunities for Aristocrat Leisure and GAMING FAC

-0.71

Correlation Coefficient

Aristocrat Leisure  GAMING FAC

Pay attention - limited upside

The 3 months correlation between Aristocrat and GAMING is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and GAMING FAC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMING FAC SA and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with GAMING FAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMING FAC SA has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and GAMING FAC go up and down completely randomly.

Pair Corralation between Aristocrat Leisure and GAMING FAC

Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 0.46 times more return on investment than GAMING FAC. However, Aristocrat Leisure Limited is 2.18 times less risky than GAMING FAC. It trades about 0.15 of its potential returns per unit of risk. GAMING FAC SA is currently generating about -0.11 per unit of risk. If you would invest  3,009  in Aristocrat Leisure Limited on September 21, 2024 and sell it today you would earn a total of  1,071  from holding Aristocrat Leisure Limited or generate 35.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.23%
Values	Daily Returns

Aristocrat Leisure Limited  vs.  GAMING FAC SA

Aristocrat Leisure

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aristocrat Leisure reported solid returns over the last few months and may actually be approaching a breakup point.

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aristocrat Leisure and GAMING FAC

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

The idea behind Aristocrat Leisure Limited and GAMING FAC SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.