Correlation Between Betsson AB and Evolution

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

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

Diversification Opportunities for Betsson AB and Evolution

-0.01

Correlation Coefficient

Betsson AB  Evolution

Good diversification

The 3 months correlation between Betsson and Evolution is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Betsson AB and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB and Betsson AB 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 Betsson AB are associated (or correlated) with Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of Betsson AB i.e., Betsson AB and Evolution go up and down completely randomly.

Pair Corralation between Betsson AB and Evolution

Assuming the 90 days trading horizon Betsson AB is expected to generate 0.7 times more return on investment than Evolution. However, Betsson AB is 1.43 times less risky than Evolution. It trades about 0.09 of its potential returns per unit of risk. Evolution AB is currently generating about -0.05 per unit of risk. If you would invest  12,837  in Betsson AB on September 3, 2024 and sell it today you would earn a total of  1,131  from holding Betsson AB or generate 8.81% return on investment over 90 days.

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

Betsson AB  vs.  Evolution AB

Betsson AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Betsson AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Betsson AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Evolution AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Betsson AB and Evolution

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

The idea behind Betsson AB and Evolution AB 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.