Correlation Between Inspired Entertainment and 888 Holdings

Can any of the company-specific risk be diversified away by investing in both Inspired Entertainment and 888 Holdings 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 Inspired Entertainment and 888 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inspired Entertainment and 888 Holdings, you can compare the effects of market volatilities on Inspired Entertainment and 888 Holdings 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 Inspired Entertainment with a short position of 888 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspired Entertainment and 888 Holdings.

Diversification Opportunities for Inspired Entertainment and 888 Holdings

-0.04

Correlation Coefficient

Inspired Entertainment  888 Holdings

Good diversification

The 3 months correlation between Inspired and 888 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment and 888 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 888 Holdings and Inspired Entertainment 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 Inspired Entertainment are associated (or correlated) with 888 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 888 Holdings has no effect on the direction of Inspired Entertainment i.e., Inspired Entertainment and 888 Holdings go up and down completely randomly.

Pair Corralation between Inspired Entertainment and 888 Holdings

Given the investment horizon of 90 days Inspired Entertainment is expected to under-perform the 888 Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Inspired Entertainment is 1.64 times less risky than 888 Holdings. The stock trades about -0.1 of its potential returns per unit of risk. The 888 Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  79.00  in 888 Holdings on September 21, 2024 and sell it today you would earn a total of  0.00  from holding 888 Holdings or generate 0.0% return on investment over 90 days.

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

Inspired Entertainment  vs.  888 Holdings

Inspired Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspired Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

888 Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 888 Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, 888 Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Inspired Entertainment and 888 Holdings

The main advantage of trading using opposite Inspired Entertainment and 888 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspired Entertainment position performs unexpectedly, 888 Holdings 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 888 Holdings will offset losses from the drop in 888 Holdings' long position.

The idea behind Inspired Entertainment and 888 Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.