Correlation Between Jackpot Digital and Gaming Realms

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

By analyzing existing cross correlation between Jackpot Digital and Gaming Realms plc, you can compare the effects of market volatilities on Jackpot Digital and Gaming Realms 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 Jackpot Digital with a short position of Gaming Realms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackpot Digital and Gaming Realms.

Diversification Opportunities for Jackpot Digital and Gaming Realms

-0.36

Correlation Coefficient

Jackpot Digital  Gaming Realms

Very good diversification

The 3 months correlation between Jackpot and Gaming is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Jackpot Digital and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms plc and Jackpot Digital 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 Jackpot Digital are associated (or correlated) with Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Jackpot Digital i.e., Jackpot Digital and Gaming Realms go up and down completely randomly.

Pair Corralation between Jackpot Digital and Gaming Realms

Assuming the 90 days horizon Jackpot Digital is expected to under-perform the Gaming Realms. In addition to that, Jackpot Digital is 2.16 times more volatile than Gaming Realms plc. It trades about -0.01 of its total potential returns per unit of risk. Gaming Realms plc is currently generating about 0.06 per unit of volatility. If you would invest  46.00  in Gaming Realms plc on December 4, 2024 and sell it today you would earn a total of  4.00  from holding Gaming Realms plc or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Jackpot Digital  vs.  Gaming Realms plc

Jackpot Digital

Risk-Adjusted Performance

Weak

Over the last 90 days Jackpot Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Jackpot Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gaming Realms plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Realms plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Gaming Realms may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jackpot Digital and Gaming Realms

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

The idea behind Jackpot Digital and Gaming Realms plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.