Correlation Between Paradox Interactive and G5 Entertainment
Can any of the company-specific risk be diversified away by investing in both Paradox Interactive and G5 Entertainment 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 Paradox Interactive and G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paradox Interactive AB and G5 Entertainment publ, you can compare the effects of market volatilities on Paradox Interactive and G5 Entertainment 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 Paradox Interactive with a short position of G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradox Interactive and G5 Entertainment.
Diversification Opportunities for Paradox Interactive and G5 Entertainment
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Paradox and G5EN is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Paradox Interactive AB and G5 Entertainment publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment publ and Paradox Interactive 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 Paradox Interactive AB are associated (or correlated) with G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment publ has no effect on the direction of Paradox Interactive i.e., Paradox Interactive and G5 Entertainment go up and down completely randomly.
Pair Corralation between Paradox Interactive and G5 Entertainment
Assuming the 90 days trading horizon Paradox Interactive AB is expected to generate 0.96 times more return on investment than G5 Entertainment. However, Paradox Interactive AB is 1.04 times less risky than G5 Entertainment. It trades about 0.04 of its potential returns per unit of risk. G5 Entertainment publ is currently generating about -0.02 per unit of risk. If you would invest 19,010 in Paradox Interactive AB on November 3, 2024 and sell it today you would earn a total of 2,690 from holding Paradox Interactive AB or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Paradox Interactive AB vs. G5 Entertainment publ
Performance |
| Timeline |
| Paradox Interactive |
| G5 Entertainment publ |
Paradox Interactive and G5 Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paradox Interactive and G5 Entertainment
The main advantage of trading using opposite Paradox Interactive and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradox Interactive position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.| Paradox Interactive vs. Stillfront Group AB | Paradox Interactive vs. Embracer Group AB | Paradox Interactive vs. G5 Entertainment publ | Paradox Interactive vs. Evolution AB |
| G5 Entertainment vs. Stillfront Group AB | G5 Entertainment vs. Paradox Interactive AB | G5 Entertainment vs. Catena Media plc | G5 Entertainment vs. Betsson 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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