Correlation Between Caffyns PLC and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both Caffyns PLC 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 Caffyns PLC and Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caffyns PLC and Evolution Gaming Group, you can compare the effects of market volatilities on Caffyns PLC 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 Caffyns PLC with a short position of Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caffyns PLC and Evolution Gaming.
Diversification Opportunities for Caffyns PLC and Evolution Gaming
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caffyns and Evolution is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Caffyns PLC and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming and Caffyns PLC 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 Caffyns PLC 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 Caffyns PLC i.e., Caffyns PLC and Evolution Gaming go up and down completely randomly.
Pair Corralation between Caffyns PLC and Evolution Gaming
Assuming the 90 days trading horizon Caffyns PLC is expected to generate 0.68 times more return on investment than Evolution Gaming. However, Caffyns PLC is 1.47 times less risky than Evolution Gaming. It trades about -0.05 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.06 per unit of risk. If you would invest 49,457 in Caffyns PLC on September 1, 2024 and sell it today you would lose (4,457) from holding Caffyns PLC or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Caffyns PLC vs. Evolution Gaming Group
Performance |
| Timeline |
| Caffyns PLC |
| Evolution Gaming |
Caffyns PLC and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caffyns PLC and Evolution Gaming
The main advantage of trading using opposite Caffyns PLC and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caffyns PLC 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.| Caffyns PLC vs. Air Products Chemicals | Caffyns PLC vs. Omega Healthcare Investors | Caffyns PLC vs. Induction Healthcare Group | Caffyns PLC vs. Universal Health Services |
| Evolution Gaming vs. Uniper SE | Evolution Gaming vs. Mulberry Group PLC | Evolution Gaming vs. London Security Plc | Evolution Gaming vs. Triad Group PLC |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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