Correlation Between Neogames and Inspired Entertainment

Can any of the company-specific risk be diversified away by investing in both Neogames and Inspired 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 Inspired 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 Inspired Entertainment, you can compare the effects of market volatilities on Neogames and Inspired 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 Inspired Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogames and Inspired Entertainment.

Diversification Opportunities for Neogames and Inspired Entertainment

0.63

Correlation Coefficient

Neogames  Inspired Entertainment

Poor diversification

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

Pair Corralation between Neogames and Inspired Entertainment

If you would invest  910.00  in Inspired Entertainment on August 28, 2024 and sell it today you would earn a total of  79.00  from holding Inspired Entertainment or generate 8.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Neogames SA  vs.  Inspired Entertainment

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.

Inspired Entertainment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inspired Entertainment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Inspired Entertainment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neogames and Inspired Entertainment

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

The idea behind Neogames SA and Inspired Entertainment 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.