Correlation Between London Security and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Evolution Gaming Group, you can compare the effects of market volatilities on London Security 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 London Security with a short position of Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Evolution Gaming.
Diversification Opportunities for London Security and Evolution Gaming
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between London and Evolution is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding London Security 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 London Security 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 London Security 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 London Security i.e., London Security and Evolution Gaming go up and down completely randomly.
Pair Corralation between London Security and Evolution Gaming
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the Evolution Gaming. In addition to that, London Security is 1.88 times more volatile than Evolution Gaming Group. It trades about -0.22 of its total potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.23 per unit of volatility. If you would invest 100,160 in Evolution Gaming Group on September 3, 2024 and sell it today you would lose (5,440) from holding Evolution Gaming Group or give up 5.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. Evolution Gaming Group
Performance |
| Timeline |
| London Security Plc |
| Evolution Gaming |
London Security and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Evolution Gaming
The main advantage of trading using opposite London Security and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Griffin Mining | London Security vs. Lundin Mining Corp | London Security vs. Veolia Environnement VE | London Security vs. Caledonia Mining |
| Evolution Gaming vs. Amedeo Air Four | Evolution Gaming vs. Alaska Air Group | Evolution Gaming vs. HCA Healthcare | Evolution Gaming vs. Worldwide Healthcare Trust |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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