Correlation Between Kambi Group and Entain DRC

Can any of the company-specific risk be diversified away by investing in both Kambi Group and Entain DRC 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 Entain DRC 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 Entain DRC PLC, you can compare the effects of market volatilities on Kambi Group and Entain DRC 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 Entain DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kambi Group and Entain DRC.

Diversification Opportunities for Kambi Group and Entain DRC

0.26

Correlation Coefficient

Kambi Group  Entain DRC

Modest diversification

The 3 months correlation between Kambi and Entain is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kambi Group plc and Entain DRC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entain DRC PLC 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 Entain DRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entain DRC PLC has no effect on the direction of Kambi Group i.e., Kambi Group and Entain DRC go up and down completely randomly.

Pair Corralation between Kambi Group and Entain DRC

Assuming the 90 days horizon Kambi Group plc is expected to generate 0.16 times more return on investment than Entain DRC. However, Kambi Group plc is 6.09 times less risky than Entain DRC. It trades about 0.23 of its potential returns per unit of risk. Entain DRC PLC is currently generating about -0.48 per unit of risk. If you would invest  958.00  in Kambi Group plc on October 15, 2024 and sell it today you would earn a total of  18.00  from holding Kambi Group plc or generate 1.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Kambi Group plc  vs.  Entain DRC PLC

Kambi Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kambi Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Entain DRC PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entain DRC PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kambi Group and Entain DRC

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

The idea behind Kambi Group plc and Entain DRC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.