Correlation Between Bt Brands and Evolution Gaming

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

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

Diversification Opportunities for Bt Brands and Evolution Gaming

0.69

Correlation Coefficient

Bt Brands  Evolution Gaming

Poor diversification

The 3 months correlation between BTBD and Evolution is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and Bt Brands 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 Bt Brands are associated (or correlated) with Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Bt Brands i.e., Bt Brands and Evolution Gaming go up and down completely randomly.

Pair Corralation between Bt Brands and Evolution Gaming

Given the investment horizon of 90 days Bt Brands is expected to generate 2.06 times more return on investment than Evolution Gaming. However, Bt Brands is 2.06 times more volatile than Evolution Gaming Group. It trades about 0.04 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.1 per unit of risk. If you would invest  145.00  in Bt Brands on October 7, 2024 and sell it today you would earn a total of  11.00  from holding Bt Brands or generate 7.59% return on investment over 90 days.

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

Bt Brands  vs.  Evolution Gaming Group

Bt Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bt Brands and Evolution Gaming

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

The idea behind Bt Brands and Evolution Gaming Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.