Correlation Between Kambi Group and Evolution

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

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

Diversification Opportunities for Kambi Group and Evolution

-0.61

Correlation Coefficient

Kambi Group  Evolution

Excellent diversification

The 3 months correlation between Kambi and Evolution is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kambi Group PLC and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB and Kambi Group 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 Kambi Group PLC are associated (or correlated) with Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of Kambi Group i.e., Kambi Group and Evolution go up and down completely randomly.

Pair Corralation between Kambi Group and Evolution

Assuming the 90 days trading horizon Kambi Group PLC is expected to generate 0.85 times more return on investment than Evolution. However, Kambi Group PLC is 1.17 times less risky than Evolution. It trades about 0.14 of its potential returns per unit of risk. Evolution AB is currently generating about -0.09 per unit of risk. If you would invest  10,590  in Kambi Group PLC on November 20, 2024 and sell it today you would earn a total of  1,690  from holding Kambi Group PLC or generate 15.96% return on investment over 90 days.

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

Kambi Group PLC  vs.  Evolution AB

Kambi Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kambi Group PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kambi Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evolution AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kambi Group and Evolution

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

The idea behind Kambi Group PLC and Evolution AB 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.