Correlation Between Stillfront Group and Paradox Interactive

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

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

Diversification Opportunities for Stillfront Group and Paradox Interactive

-0.08

Correlation Coefficient

Stillfront Group  Paradox Interactive

Good diversification

The 3 months correlation between Stillfront and Paradox is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Stillfront Group 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 Stillfront Group 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 Stillfront Group 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 Stillfront Group i.e., Stillfront Group and Paradox Interactive go up and down completely randomly.

Pair Corralation between Stillfront Group and Paradox Interactive

Assuming the 90 days horizon Stillfront Group AB is expected to under-perform the Paradox Interactive. In addition to that, Stillfront Group is 1.78 times more volatile than Paradox Interactive AB. It trades about -0.03 of its total potential returns per unit of risk. Paradox Interactive AB is currently generating about 0.13 per unit of volatility. If you would invest  18,580  in Paradox Interactive AB on November 29, 2024 and sell it today you would earn a total of  2,640  from holding Paradox Interactive AB or generate 14.21% return on investment over 90 days.

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

Stillfront Group AB  vs.  Paradox Interactive AB

Stillfront Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stillfront Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Paradox Interactive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paradox Interactive AB are ranked lower than 10 (%) 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 Stillfront Group and Paradox Interactive

The main advantage of trading using opposite Stillfront Group and Paradox Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stillfront Group 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 Stillfront Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.