Correlation Between Fractal Gaming and NP3 Fastigheter

Can any of the company-specific risk be diversified away by investing in both Fractal Gaming and NP3 Fastigheter 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 Fractal Gaming and NP3 Fastigheter into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fractal Gaming Group and NP3 Fastigheter AB, you can compare the effects of market volatilities on Fractal Gaming and NP3 Fastigheter 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 Fractal Gaming with a short position of NP3 Fastigheter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fractal Gaming and NP3 Fastigheter.

Diversification Opportunities for Fractal Gaming and NP3 Fastigheter

0.46

Correlation Coefficient

Fractal Gaming  NP3 Fastigheter

Very weak diversification

The 3 months correlation between Fractal and NP3 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fractal Gaming Group and NP3 Fastigheter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NP3 Fastigheter AB and Fractal Gaming 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 Fractal Gaming Group are associated (or correlated) with NP3 Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NP3 Fastigheter AB has no effect on the direction of Fractal Gaming i.e., Fractal Gaming and NP3 Fastigheter go up and down completely randomly.

Pair Corralation between Fractal Gaming and NP3 Fastigheter

Assuming the 90 days trading horizon Fractal Gaming Group is expected to generate 1.3 times more return on investment than NP3 Fastigheter. However, Fractal Gaming is 1.3 times more volatile than NP3 Fastigheter AB. It trades about 0.12 of its potential returns per unit of risk. NP3 Fastigheter AB is currently generating about 0.02 per unit of risk. If you would invest  3,170  in Fractal Gaming Group on November 29, 2024 and sell it today you would earn a total of  540.00  from holding Fractal Gaming Group or generate 17.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Fractal Gaming Group  vs.  NP3 Fastigheter AB

Fractal Gaming Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fractal Gaming Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fractal Gaming sustained solid returns over the last few months and may actually be approaching a breakup point.

NP3 Fastigheter AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NP3 Fastigheter AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, NP3 Fastigheter is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fractal Gaming and NP3 Fastigheter

The main advantage of trading using opposite Fractal Gaming and NP3 Fastigheter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fractal Gaming position performs unexpectedly, NP3 Fastigheter 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 NP3 Fastigheter will offset losses from the drop in NP3 Fastigheter's long position.

The idea behind Fractal Gaming Group and NP3 Fastigheter 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.