Correlation Between Century Casinos and MGM China

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

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

Diversification Opportunities for Century Casinos and MGM China

-0.53

Correlation Coefficient

Century Casinos  MGM China

Excellent diversification

The 3 months correlation between Century and MGM is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Century Casinos and MGM China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM China Holdings and Century Casinos 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 Century Casinos are associated (or correlated) with MGM China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM China Holdings has no effect on the direction of Century Casinos i.e., Century Casinos and MGM China go up and down completely randomly.

Pair Corralation between Century Casinos and MGM China

Given the investment horizon of 90 days Century Casinos is expected to generate 1.21 times more return on investment than MGM China. However, Century Casinos is 1.21 times more volatile than MGM China Holdings. It trades about 0.17 of its potential returns per unit of risk. MGM China Holdings is currently generating about 0.03 per unit of risk. If you would invest  257.00  in Century Casinos on September 13, 2024 and sell it today you would earn a total of  125.00  from holding Century Casinos or generate 48.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Century Casinos  vs.  MGM China Holdings

Century Casinos

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Casinos are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Century Casinos showed solid returns over the last few months and may actually be approaching a breakup point.

MGM China Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGM China Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, MGM China is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Century Casinos and MGM China

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

The idea behind Century Casinos and MGM China Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.