Correlation Between Everplay Group and Frontier Developments

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

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

Diversification Opportunities for Everplay Group and Frontier Developments

0.92

Correlation Coefficient

Everplay Group  Frontier Developments

Almost no diversification

The 3 months correlation between Everplay and Frontier is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Everplay Group PLC and Frontier Developments Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Developments Plc and Everplay Group 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 Everplay Group PLC are associated (or correlated) with Frontier Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Developments Plc has no effect on the direction of Everplay Group i.e., Everplay Group and Frontier Developments go up and down completely randomly.

Pair Corralation between Everplay Group and Frontier Developments

Assuming the 90 days trading horizon Everplay Group is expected to generate 2.16 times less return on investment than Frontier Developments. But when comparing it to its historical volatility, Everplay Group PLC is 1.07 times less risky than Frontier Developments. It trades about 0.17 of its potential returns per unit of risk. Frontier Developments Plc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  19,120  in Frontier Developments Plc on April 22, 2025 and sell it today you would earn a total of  17,880  from holding Frontier Developments Plc or generate 93.51% return on investment over 90 days.

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

Everplay Group PLC  vs.  Frontier Developments Plc

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 13 (%) 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.

Frontier Developments Plc

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Developments Plc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Frontier Developments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everplay Group and Frontier Developments

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

The idea behind Everplay Group PLC and Frontier Developments 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.