Correlation Between SGHC and Esports Entertainment

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

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

Diversification Opportunities for SGHC and Esports Entertainment

-0.84

Correlation Coefficient

SGHC  Esports Entertainment

Pay attention - limited upside

The 3 months correlation between SGHC and Esports is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding SGHC Limited and Esports Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esports Entertainment and SGHC 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 SGHC Limited are associated (or correlated) with Esports Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esports Entertainment has no effect on the direction of SGHC i.e., SGHC and Esports Entertainment go up and down completely randomly.

Pair Corralation between SGHC and Esports Entertainment

If you would invest  363.00  in SGHC Limited on September 30, 2024 and sell it today you would earn a total of  247.00  from holding SGHC Limited or generate 68.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

SGHC Limited  vs.  Esports Entertainment Group

SGHC Limited

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SGHC Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, SGHC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Esports Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esports Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Esports Entertainment is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SGHC and Esports Entertainment

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

The idea behind SGHC Limited and Esports Entertainment Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.