Correlation Between Osaka Steel and Evolution Gaming

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

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

Diversification Opportunities for Osaka Steel and Evolution Gaming

-0.63

Correlation Coefficient

Osaka Steel  Evolution Gaming

Excellent diversification

The 3 months correlation between Osaka and Evolution is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and Osaka Steel 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 Osaka Steel Co, are associated (or correlated) with Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Osaka Steel i.e., Osaka Steel and Evolution Gaming go up and down completely randomly.

Pair Corralation between Osaka Steel and Evolution Gaming

Assuming the 90 days horizon Osaka Steel Co, is expected to generate 0.04 times more return on investment than Evolution Gaming. However, Osaka Steel Co, is 26.51 times less risky than Evolution Gaming. It trades about 0.08 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.09 per unit of risk. If you would invest  1,010  in Osaka Steel Co, on September 18, 2024 and sell it today you would earn a total of  10.00  from holding Osaka Steel Co, or generate 0.99% return on investment over 90 days.

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

Osaka Steel Co,  vs.  Evolution Gaming Group

Osaka Steel Co,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Osaka Steel Co, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Osaka Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Osaka Steel and Evolution Gaming

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

The idea behind Osaka Steel Co, and Evolution Gaming 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.