Correlation Between Evolution Gaming and INTERNATIONAL

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

Diversification Opportunities for Evolution Gaming and INTERNATIONAL

-0.14

Correlation Coefficient

Evolution Gaming  INTERNATIONAL

Good diversification

The 3 months correlation between Evolution and INTERNATIONAL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and INTERNATIONAL FLAVORS FRAGRANC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL FLAVORS 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 INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL FLAVORS has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and INTERNATIONAL go up and down completely randomly.

Pair Corralation between Evolution Gaming and INTERNATIONAL

Assuming the 90 days horizon Evolution Gaming Group is expected to generate 2.39 times more return on investment than INTERNATIONAL. However, Evolution Gaming is 2.39 times more volatile than INTERNATIONAL FLAVORS FRAGRANCES. It trades about 0.04 of its potential returns per unit of risk. INTERNATIONAL FLAVORS FRAGRANCES is currently generating about -0.11 per unit of risk. If you would invest  7,744  in Evolution Gaming Group on December 27, 2024 and sell it today you would earn a total of  244.00  from holding Evolution Gaming Group or generate 3.15% return on investment over 90 days.

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

Evolution Gaming Group  vs.  INTERNATIONAL FLAVORS FRAGRANC

Evolution Gaming

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Gaming Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNATIONAL FLAVORS FRAGRANCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTERNATIONAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evolution Gaming and INTERNATIONAL

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

The idea behind Evolution Gaming Group and INTERNATIONAL FLAVORS FRAGRANCES 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..