Correlation Between Evolution Gaming and SM Investments

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

Diversification Opportunities for Evolution Gaming and SM Investments

-0.12

Correlation Coefficient

Evolution Gaming  SM Investments

Good diversification

The 3 months correlation between Evolution and SVTMF is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments 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 SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and SM Investments go up and down completely randomly.

Pair Corralation between Evolution Gaming and SM Investments

Assuming the 90 days horizon Evolution Gaming Group is expected to generate 1.48 times more return on investment than SM Investments. However, Evolution Gaming is 1.48 times more volatile than SM Investments. It trades about 0.0 of its potential returns per unit of risk. SM Investments is currently generating about -0.19 per unit of risk. If you would invest  8,086  in Evolution Gaming Group on December 20, 2024 and sell it today you would lose (133.00) from holding Evolution Gaming Group or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

Evolution Gaming Group  vs.  SM Investments

Evolution Gaming

Risk-Adjusted Performance

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 fairly strong basic indicators, Evolution Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SM Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SM Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Evolution Gaming and SM Investments

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

The idea behind Evolution Gaming Group and SM Investments 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.