Correlation Between MAG Interactive and BIMobject

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

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

Diversification Opportunities for MAG Interactive and BIMobject

-0.28

Correlation Coefficient

MAG Interactive  BIMobject

Very good diversification

The 3 months correlation between MAG and BIMobject is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding MAG Interactive AB and BIMobject AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIMobject AB and MAG 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 MAG Interactive AB are associated (or correlated) with BIMobject. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIMobject AB has no effect on the direction of MAG Interactive i.e., MAG Interactive and BIMobject go up and down completely randomly.

Pair Corralation between MAG Interactive and BIMobject

Assuming the 90 days trading horizon MAG Interactive AB is expected to under-perform the BIMobject. But the stock apears to be less risky and, when comparing its historical volatility, MAG Interactive AB is 1.25 times less risky than BIMobject. The stock trades about -0.06 of its potential returns per unit of risk. The BIMobject AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  300.00  in BIMobject AB on September 26, 2024 and sell it today you would earn a total of  150.00  from holding BIMobject AB or generate 50.0% return on investment over 90 days.

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

MAG Interactive AB  vs.  BIMobject AB

MAG Interactive AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Interactive AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MAG Interactive unveiled solid returns over the last few months and may actually be approaching a breakup point.

BIMobject AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIMobject AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, BIMobject may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MAG Interactive and BIMobject

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

The idea behind MAG Interactive AB and BIMobject 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.