Correlation Between BigBen Interactive and Sword Group

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

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

Diversification Opportunities for BigBen Interactive and Sword Group

0.68

Correlation Coefficient

BigBen Interactive  Sword Group

Poor diversification

The 3 months correlation between BigBen and Sword is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BigBen Interactive and Sword Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sword Group SE and BigBen 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 BigBen Interactive are associated (or correlated) with Sword Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sword Group SE has no effect on the direction of BigBen Interactive i.e., BigBen Interactive and Sword Group go up and down completely randomly.

Pair Corralation between BigBen Interactive and Sword Group

Assuming the 90 days trading horizon BigBen Interactive is expected to under-perform the Sword Group. In addition to that, BigBen Interactive is 1.81 times more volatile than Sword Group SE. It trades about -0.15 of its total potential returns per unit of risk. Sword Group SE is currently generating about -0.14 per unit of volatility. If you would invest  3,575  in Sword Group SE on December 29, 2024 and sell it today you would lose (430.00) from holding Sword Group SE or give up 12.03% of portfolio value over 90 days.

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

BigBen Interactive  vs.  Sword Group SE

BigBen Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days BigBen Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sword Group SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sword Group SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BigBen Interactive and Sword Group

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

The idea behind BigBen Interactive and Sword Group SE 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.