Correlation Between Gambling and Golden Entertainment

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

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

Diversification Opportunities for Gambling and Golden Entertainment

0.75

Correlation Coefficient

Gambling  Golden Entertainment

Poor diversification

The 3 months correlation between Gambling and Golden is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gambling Group and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment and Gambling 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 Gambling Group are associated (or correlated) with Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Gambling i.e., Gambling and Golden Entertainment go up and down completely randomly.

Pair Corralation between Gambling and Golden Entertainment

Given the investment horizon of 90 days Gambling Group is expected to generate 1.5 times more return on investment than Golden Entertainment. However, Gambling is 1.5 times more volatile than Golden Entertainment. It trades about 0.16 of its potential returns per unit of risk. Golden Entertainment is currently generating about 0.07 per unit of risk. If you would invest  997.00  in Gambling Group on September 3, 2024 and sell it today you would earn a total of  329.00  from holding Gambling Group or generate 33.0% return on investment over 90 days.

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

Gambling Group  vs.  Golden Entertainment

Gambling Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gambling Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Gambling sustained solid returns over the last few months and may actually be approaching a breakup point.

Golden Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Golden Entertainment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gambling and Golden Entertainment

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

The idea behind Gambling Group and Golden Entertainment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.