Correlation Between International Game and Net 1

Can any of the company-specific risk be diversified away by investing in both International Game and Net 1 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 International Game and Net 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Game Technology and Net 1 Ueps, you can compare the effects of market volatilities on International Game and Net 1 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 International Game with a short position of Net 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and Net 1.

Diversification Opportunities for International Game and Net 1

0.48

Correlation Coefficient

International Game  Net 1

Very weak diversification

The 3 months correlation between International and Net is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Net 1 Ueps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Net 1 Ueps and International Game 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 International Game Technology are associated (or correlated) with Net 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Net 1 Ueps has no effect on the direction of International Game i.e., International Game and Net 1 go up and down completely randomly.

Pair Corralation between International Game and Net 1

Assuming the 90 days horizon International Game Technology is expected to under-perform the Net 1. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.2 times less risky than Net 1. The stock trades about -0.06 of its potential returns per unit of risk. The Net 1 Ueps is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  338.00  in Net 1 Ueps on April 20, 2025 and sell it today you would earn a total of  42.00  from holding Net 1 Ueps or generate 12.43% return on investment over 90 days.

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

International Game Technology  vs.  Net 1 Ueps

International Game

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Net 1 Ueps

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Net 1 Ueps are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Net 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Game and Net 1

The main advantage of trading using opposite International Game and Net 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game position performs unexpectedly, Net 1 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 Net 1 will offset losses from the drop in Net 1's long position.

The idea behind International Game Technology and Net 1 Ueps 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.