Correlation Between Biglari Holdings and NeogamesSA

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Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and NeogamesSA 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 Biglari Holdings and NeogamesSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and NeogamesSA, you can compare the effects of market volatilities on Biglari Holdings and NeogamesSA 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 Biglari Holdings with a short position of NeogamesSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and NeogamesSA.

Diversification Opportunities for Biglari Holdings and NeogamesSA

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Biglari and NeogamesSA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and NeogamesSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeogamesSA and Biglari Holdings 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 Biglari Holdings are associated (or correlated) with NeogamesSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeogamesSA has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and NeogamesSA go up and down completely randomly.

Pair Corralation between Biglari Holdings and NeogamesSA

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 7.84 times more return on investment than NeogamesSA. However, Biglari Holdings is 7.84 times more volatile than NeogamesSA. It trades about 0.15 of its potential returns per unit of risk. NeogamesSA is currently generating about 0.25 per unit of risk. If you would invest  15,749  in Biglari Holdings on December 3, 2023 and sell it today you would earn a total of  1,151  from holding Biglari Holdings or generate 7.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Biglari Holdings  vs.  NeogamesSA

 Performance 
       Timeline  
Biglari Holdings 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.
NeogamesSA 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in NeogamesSA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, NeogamesSA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Biglari Holdings and NeogamesSA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Biglari Holdings and NeogamesSA

The main advantage of trading using opposite Biglari Holdings and NeogamesSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, NeogamesSA 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 NeogamesSA will offset losses from the drop in NeogamesSA's long position.
The idea behind Biglari Holdings and NeogamesSA 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.

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