Correlation Between Evolution Gaming and NetEase

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

Diversification Opportunities for Evolution Gaming and NetEase

0.65

Correlation Coefficient

Evolution Gaming  NetEase

Poor diversification

The 3 months correlation between Evolution and NetEase is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Evolution Gaming i.e., Evolution Gaming and NetEase go up and down completely randomly.

Pair Corralation between Evolution Gaming and NetEase

Assuming the 90 days horizon Evolution Gaming Group is expected to generate 1.52 times more return on investment than NetEase. However, Evolution Gaming is 1.52 times more volatile than NetEase. It trades about 0.18 of its potential returns per unit of risk. NetEase is currently generating about 0.15 per unit of risk. If you would invest  6,744  in Evolution Gaming Group on May 16, 2025 and sell it today you would earn a total of  1,722  from holding Evolution Gaming Group or generate 25.53% return on investment over 90 days.

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

Evolution Gaming Group  vs.  NetEase

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.

NetEase

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, NetEase unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolution Gaming and NetEase

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

The idea behind Evolution Gaming Group and NetEase 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.