Correlation Between Aristocrat Leisure and Kambi Group

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

Diversification Opportunities for Aristocrat Leisure and Kambi Group

0.52

Correlation Coefficient

Aristocrat Leisure  Kambi Group

Very weak diversification

The 3 months correlation between Aristocrat and Kambi is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Kambi Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kambi Group plc 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 Kambi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kambi Group plc has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Kambi Group go up and down completely randomly.

Pair Corralation between Aristocrat Leisure and Kambi Group

Assuming the 90 days horizon Aristocrat Leisure Limited is expected to under-perform the Kambi Group. In addition to that, Aristocrat Leisure is 1.6 times more volatile than Kambi Group plc. It trades about -0.02 of its total potential returns per unit of risk. Kambi Group plc is currently generating about 0.03 per unit of volatility. If you would invest  958.00  in Kambi Group plc on December 30, 2024 and sell it today you would earn a total of  23.00  from holding Kambi Group plc or generate 2.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Aristocrat Leisure Limited  vs.  Kambi Group plc

Aristocrat Leisure

Risk-Adjusted Performance

Very Weak

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

Kambi Group plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kambi Group plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Kambi Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aristocrat Leisure and Kambi Group

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

The idea behind Aristocrat Leisure Limited and Kambi Group plc 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.