Correlation Between Esports Entertainment and Neogames

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

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

Diversification Opportunities for Esports Entertainment and Neogames

-0.47

Correlation Coefficient

Esports Entertainment  Neogames

Very good diversification

The 3 months correlation between Esports and Neogames is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Esports Entertainment Group and Neogames SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogames SA and Esports Entertainment 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 Esports Entertainment Group are associated (or correlated) with Neogames. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogames SA has no effect on the direction of Esports Entertainment i.e., Esports Entertainment and Neogames go up and down completely randomly.

Pair Corralation between Esports Entertainment and Neogames

Given the investment horizon of 90 days Esports Entertainment Group is expected to under-perform the Neogames. In addition to that, Esports Entertainment is 1.03 times more volatile than Neogames SA. It trades about -0.14 of its total potential returns per unit of risk. Neogames SA is currently generating about 0.08 per unit of volatility. If you would invest  1,291  in Neogames SA on September 21, 2024 and sell it today you would earn a total of  1,418  from holding Neogames SA or generate 109.84% return on investment over 90 days.

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

Esports Entertainment Group  vs.  Neogames SA

Esports Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esports Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Esports Entertainment is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Neogames SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogames SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Neogames is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Esports Entertainment and Neogames

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

The idea behind Esports Entertainment Group and Neogames SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.