Correlation Between Evolution Gaming and FRONTEO

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

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

Diversification Opportunities for Evolution Gaming and FRONTEO

0.0

Correlation Coefficient

Evolution Gaming  FRONTEO

Pay attention - limited upside

The 3 months correlation between Evolution and FRONTEO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and FRONTEO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRONTEO and Evolution Gaming 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 Evolution Gaming Group are associated (or correlated) with FRONTEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRONTEO has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and FRONTEO go up and down completely randomly.

Pair Corralation between Evolution Gaming and FRONTEO

If you would invest  9,742  in Evolution Gaming Group on February 26, 2024 and sell it today you would earn a total of  1,093  from holding Evolution Gaming Group or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Evolution Gaming Group  vs.  FRONTEO

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

FRONTEO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FRONTEO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, FRONTEO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evolution Gaming and FRONTEO

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

The idea behind Evolution Gaming Group and FRONTEO 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.