Correlation Between Evolution Gaming and CERo Therapeutics

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

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

Diversification Opportunities for Evolution Gaming and CERo Therapeutics

-0.2

Correlation Coefficient

Evolution Gaming  CERo Therapeutics

Good diversification

The 3 months correlation between Evolution and CERo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics and Evolution Gaming 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 Evolution Gaming Group are associated (or correlated) with CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and CERo Therapeutics go up and down completely randomly.

Pair Corralation between Evolution Gaming and CERo Therapeutics

Assuming the 90 days horizon Evolution Gaming Group is expected to under-perform the CERo Therapeutics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Evolution Gaming Group is 14.57 times less risky than CERo Therapeutics. The pink sheet trades about -0.02 of its potential returns per unit of risk. The CERo Therapeutics Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7.00  in CERo Therapeutics Holdings on October 4, 2024 and sell it today you would lose (6.00) from holding CERo Therapeutics Holdings or give up 85.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	34.34%
Values	Daily Returns

Evolution Gaming Group  vs.  CERo Therapeutics Holdings

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 fragile 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.

CERo Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CERo Therapeutics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CERo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Gaming and CERo Therapeutics

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

The idea behind Evolution Gaming Group and CERo Therapeutics 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.