Correlation Between Smart Share and Accel Entertainment

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

By analyzing existing cross correlation between Smart Share Global and Accel Entertainment, you can compare the effects of market volatilities on Smart Share and Accel 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 Smart Share with a short position of Accel Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Share and Accel Entertainment.

Diversification Opportunities for Smart Share and Accel Entertainment

-0.35

Correlation Coefficient

Smart Share  Accel Entertainment

Very good diversification

The 3 months correlation between Smart and Accel is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Smart Share Global and Accel Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accel Entertainment and Smart Share 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 Smart Share Global are associated (or correlated) with Accel Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accel Entertainment has no effect on the direction of Smart Share i.e., Smart Share and Accel Entertainment go up and down completely randomly.

Pair Corralation between Smart Share and Accel Entertainment

Allowing for the 90-day total investment horizon Smart Share Global is expected to generate 3.95 times more return on investment than Accel Entertainment. However, Smart Share is 3.95 times more volatile than Accel Entertainment. It trades about 0.07 of its potential returns per unit of risk. Accel Entertainment is currently generating about 0.03 per unit of risk. If you would invest  62.00  in Smart Share Global on September 5, 2024 and sell it today you would earn a total of  10.00  from holding Smart Share Global or generate 16.13% return on investment over 90 days.

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

Smart Share Global  vs.  Accel Entertainment

Smart Share Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Share Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Smart Share displayed solid returns over the last few months and may actually be approaching a breakup point.

Accel Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Accel Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Accel Entertainment is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Smart Share and Accel Entertainment

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

The idea behind Smart Share Global and Accel 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.