Correlation Between Evolution Gaming and Evolution

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

Diversification Opportunities for Evolution Gaming and Evolution

0.84

Correlation Coefficient

Evolution Gaming  Evolution

Very poor diversification

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

Pair Corralation between Evolution Gaming and Evolution

Assuming the 90 days horizon Evolution Gaming is expected to generate 1.1 times less return on investment than Evolution. But when comparing it to its historical volatility, Evolution Gaming Group is 1.05 times less risky than Evolution. It trades about 0.12 of its potential returns per unit of risk. Evolution AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,610  in Evolution AB on May 16, 2025 and sell it today you would earn a total of  890.00  from holding Evolution AB or generate 11.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.62%
Values	Daily Returns

Evolution Gaming Group  vs.  Evolution AB

Evolution Gaming

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Gaming Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Evolution Gaming showed solid returns over the last few months and may actually be approaching a breakup point.

Evolution AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Evolution reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Gaming and Evolution

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

The idea behind Evolution Gaming Group and Evolution AB 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.