Correlation Between Evolution Gaming and Dolphin Entertainment

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

Diversification Opportunities for Evolution Gaming and Dolphin Entertainment

0.47

Correlation Coefficient

Evolution Gaming  Dolphin Entertainment

Very weak diversification

The 3 months correlation between Evolution and Dolphin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment 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 Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Evolution Gaming and Dolphin Entertainment

Assuming the 90 days horizon Evolution Gaming Group is expected to under-perform the Dolphin Entertainment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Evolution Gaming Group is 2.25 times less risky than Dolphin Entertainment. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Dolphin Entertainment is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  165.00  in Dolphin Entertainment on September 30, 2024 and sell it today you would lose (51.00) from holding Dolphin Entertainment or give up 30.91% of portfolio value over 90 days.

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

Evolution Gaming Group  vs.  Dolphin Entertainment

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 fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Evolution Gaming and Dolphin Entertainment

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

The idea behind Evolution Gaming Group and Dolphin 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.