Correlation Between Software Circle and Everplay Group

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

By analyzing existing cross correlation between Software Circle plc and Everplay Group PLC, you can compare the effects of market volatilities on Software Circle and Everplay Group 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 Software Circle with a short position of Everplay Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Circle and Everplay Group.

Diversification Opportunities for Software Circle and Everplay Group

-0.59

Correlation Coefficient

Software Circle  Everplay Group

Excellent diversification

The 3 months correlation between Software and Everplay is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle plc and Everplay Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everplay Group PLC and Software Circle 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 Software Circle plc are associated (or correlated) with Everplay Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everplay Group PLC has no effect on the direction of Software Circle i.e., Software Circle and Everplay Group go up and down completely randomly.

Pair Corralation between Software Circle and Everplay Group

Assuming the 90 days trading horizon Software Circle plc is expected to under-perform the Everplay Group. But the stock apears to be less risky and, when comparing its historical volatility, Software Circle plc is 1.8 times less risky than Everplay Group. The stock trades about -0.01 of its potential returns per unit of risk. The Everplay Group PLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  27,160  in Everplay Group PLC on May 19, 2025 and sell it today you would earn a total of  10,640  from holding Everplay Group PLC or generate 39.18% return on investment over 90 days.

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

Software Circle plc  vs.  Everplay Group PLC

Software Circle plc

Risk-Adjusted Performance

Weakest

Over the last 90 days Software Circle plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Software Circle is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Everplay Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everplay Group PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Everplay Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Software Circle and Everplay Group

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

The idea behind Software Circle plc and Everplay Group PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..