Correlation Between Evolution Gaming and 26884ABB8

Can any of the company-specific risk be diversified away by investing in both Evolution Gaming and 26884ABB8 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 26884ABB8 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 ERP OPER LTD, you can compare the effects of market volatilities on Evolution Gaming and 26884ABB8 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 26884ABB8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Gaming and 26884ABB8.

Diversification Opportunities for Evolution Gaming and 26884ABB8

0.34

Correlation Coefficient

Evolution Gaming  26884ABB8

Weak diversification

The 3 months correlation between Evolution and 26884ABB8 is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and ERP OPER LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERP OPER LTD 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 26884ABB8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERP OPER LTD has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and 26884ABB8 go up and down completely randomly.

Pair Corralation between Evolution Gaming and 26884ABB8

Assuming the 90 days horizon Evolution Gaming Group is expected to generate 2.13 times more return on investment than 26884ABB8. However, Evolution Gaming is 2.13 times more volatile than ERP OPER LTD. It trades about -0.05 of its potential returns per unit of risk. ERP OPER LTD is currently generating about -0.14 per unit of risk. If you would invest  9,818  in Evolution Gaming Group on September 12, 2024 and sell it today you would lose (878.00) from holding Evolution Gaming Group or give up 8.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.6%
Values	Daily Returns

Evolution Gaming Group  vs.  ERP OPER LTD

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 latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ERP OPER LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ERP OPER LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ERP OPER LTD investors.

Pair Trading with Evolution Gaming and 26884ABB8

The main advantage of trading using opposite Evolution Gaming and 26884ABB8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Gaming position performs unexpectedly, 26884ABB8 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 26884ABB8 will offset losses from the drop in 26884ABB8's long position.

The idea behind Evolution Gaming Group and ERP OPER LTD 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.