Correlation Between Ballys Corp and Century Casinos

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

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

Diversification Opportunities for Ballys Corp and Century Casinos

0.79

Correlation Coefficient

Ballys Corp  Century Casinos

Poor diversification

The 3 months correlation between Ballys and Century is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ballys Corp and Century Casinos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Casinos and Ballys Corp 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 Ballys Corp are associated (or correlated) with Century Casinos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Casinos has no effect on the direction of Ballys Corp i.e., Ballys Corp and Century Casinos go up and down completely randomly.

Pair Corralation between Ballys Corp and Century Casinos

Given the investment horizon of 90 days Ballys Corp is expected to generate 7.93 times less return on investment than Century Casinos. But when comparing it to its historical volatility, Ballys Corp is 12.29 times less risky than Century Casinos. It trades about 0.15 of its potential returns per unit of risk. Century Casinos is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  256.00  in Century Casinos on September 30, 2024 and sell it today you would earn a total of  60.00  from holding Century Casinos or generate 23.44% return on investment over 90 days.

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

Ballys Corp  vs.  Century Casinos

Ballys Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ballys Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Ballys Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Century Casinos

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Ballys Corp and Century Casinos

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

The idea behind Ballys Corp and Century Casinos 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.