Correlation Between KABE Group and Paradox Interactive
Can any of the company-specific risk be diversified away by investing in both KABE Group and Paradox Interactive 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 KABE Group and Paradox Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KABE Group AB and Paradox Interactive AB, you can compare the effects of market volatilities on KABE Group and Paradox Interactive 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 KABE Group with a short position of Paradox Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of KABE Group and Paradox Interactive.
Diversification Opportunities for KABE Group and Paradox Interactive
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KABE and Paradox is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Paradox Interactive AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradox Interactive and KABE 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 KABE Group AB are associated (or correlated) with Paradox Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradox Interactive has no effect on the direction of KABE Group i.e., KABE Group and Paradox Interactive go up and down completely randomly.
Pair Corralation between KABE Group and Paradox Interactive
Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Paradox Interactive. In addition to that, KABE Group is 1.76 times more volatile than Paradox Interactive AB. It trades about -0.13 of its total potential returns per unit of risk. Paradox Interactive AB is currently generating about -0.22 per unit of volatility. If you would invest 19,870 in Paradox Interactive AB on August 31, 2024 and sell it today you would lose (1,320) from holding Paradox Interactive AB or give up 6.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KABE Group AB vs. Paradox Interactive AB
Performance |
| Timeline |
| KABE Group AB |
| Paradox Interactive |
KABE Group and Paradox Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KABE Group and Paradox Interactive
The main advantage of trading using opposite KABE Group and Paradox Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group position performs unexpectedly, Paradox Interactive 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 Paradox Interactive will offset losses from the drop in Paradox Interactive's long position.| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave Group |
| Paradox Interactive vs. Stillfront Group AB | Paradox Interactive vs. Embracer Group AB | Paradox Interactive vs. G5 Entertainment publ | Paradox Interactive vs. Evolution AB |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |