Correlation Between Beijer Ref and Paradox Interactive

Can any of the company-specific risk be diversified away by investing in both Beijer Ref 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 Beijer Ref and Paradox Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beijer Ref AB and Paradox Interactive AB, you can compare the effects of market volatilities on Beijer Ref 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 Beijer Ref with a short position of Paradox Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijer Ref and Paradox Interactive.

Diversification Opportunities for Beijer Ref and Paradox Interactive

-0.51

Correlation Coefficient

Beijer Ref  Paradox Interactive

Excellent diversification

The 3 months correlation between Beijer and Paradox is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Ref 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 Beijer Ref 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 Beijer Ref 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 Beijer Ref i.e., Beijer Ref and Paradox Interactive go up and down completely randomly.

Pair Corralation between Beijer Ref and Paradox Interactive

Assuming the 90 days trading horizon Beijer Ref AB is expected to generate 1.78 times more return on investment than Paradox Interactive. However, Beijer Ref is 1.78 times more volatile than Paradox Interactive AB. It trades about 0.05 of its potential returns per unit of risk. Paradox Interactive AB is currently generating about -0.22 per unit of risk. If you would invest  16,090  in Beijer Ref AB on August 31, 2024 and sell it today you would earn a total of  315.00  from holding Beijer Ref AB or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Beijer Ref AB  vs.  Paradox Interactive AB

Beijer Ref AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijer Ref AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Beijer Ref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Paradox Interactive

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paradox Interactive AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Paradox Interactive unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijer Ref and Paradox Interactive

The main advantage of trading using opposite Beijer Ref and Paradox Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijer Ref 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.

The idea behind Beijer Ref AB and Paradox Interactive AB 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.