Correlation Between Neogames and Esports Entertainment

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

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

Diversification Opportunities for Neogames and Esports Entertainment

-0.47

Correlation Coefficient

Neogames  Esports Entertainment

Very good diversification

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

Pair Corralation between Neogames and Esports Entertainment

Given the investment horizon of 90 days Neogames SA is expected to generate 0.97 times more return on investment than Esports Entertainment. However, Neogames SA is 1.03 times less risky than Esports Entertainment. It trades about 0.08 of its potential returns per unit of risk. Esports Entertainment Group is currently generating about -0.14 per unit of risk. 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

Neogames SA  vs.  Esports Entertainment Group

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.

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.

Pair Trading with Neogames and Esports Entertainment

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

The idea behind Neogames SA and Esports Entertainment Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.