Correlation Between Aristocrat Leisure and CI GAMES

Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and CI GAMES 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 CI GAMES 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 CI GAMES SA, you can compare the effects of market volatilities on Aristocrat Leisure and CI GAMES 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 CI GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and CI GAMES.

Diversification Opportunities for Aristocrat Leisure and CI GAMES

0.61

Correlation Coefficient

Aristocrat Leisure  CI GAMES

Poor diversification

The 3 months correlation between Aristocrat and CI7 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and CI GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI GAMES 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 CI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI GAMES SA has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and CI GAMES go up and down completely randomly.

Pair Corralation between Aristocrat Leisure and CI GAMES

Assuming the 90 days horizon Aristocrat Leisure is expected to generate 2.67 times less return on investment than CI GAMES. But when comparing it to its historical volatility, Aristocrat Leisure Limited is 3.29 times less risky than CI GAMES. It trades about 0.09 of its potential returns per unit of risk. CI GAMES SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  33.00  in CI GAMES SA on November 29, 2024 and sell it today you would earn a total of  5.00  from holding CI GAMES SA or generate 15.15% return on investment over 90 days.

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

Aristocrat Leisure Limited  vs.  CI GAMES SA

Aristocrat Leisure

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aristocrat Leisure may actually be approaching a critical reversion point that can send shares even higher in March 2025.

CI GAMES SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI GAMES SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CI GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aristocrat Leisure and CI GAMES

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

The idea behind Aristocrat Leisure Limited and CI GAMES 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.