Correlation Between Zaptec AS and Paradox Interactive

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

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

Diversification Opportunities for Zaptec AS and Paradox Interactive

-0.2

Correlation Coefficient

Zaptec AS  Paradox Interactive

Good diversification

The 3 months correlation between Zaptec and Paradox is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Zaptec AS and Paradox Interactive AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradox Interactive and Zaptec AS 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 Zaptec AS 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 Zaptec AS i.e., Zaptec AS and Paradox Interactive go up and down completely randomly.

Pair Corralation between Zaptec AS and Paradox Interactive

Assuming the 90 days trading horizon Zaptec AS is expected to under-perform the Paradox Interactive. In addition to that, Zaptec AS is 2.36 times more volatile than Paradox Interactive AB. It trades about -0.02 of its total potential returns per unit of risk. Paradox Interactive AB is currently generating about 0.18 per unit of volatility. If you would invest  17,200  in Paradox Interactive AB on September 23, 2024 and sell it today you would earn a total of  3,320  from holding Paradox Interactive AB or generate 19.3% return on investment over 90 days.

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

Zaptec AS  vs.  Paradox Interactive AB

Zaptec AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zaptec AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Zaptec AS is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Paradox Interactive

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paradox Interactive AB are ranked lower than 14 (%) 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 Zaptec AS and Paradox Interactive

The main advantage of trading using opposite Zaptec AS and Paradox Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zaptec AS 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 Zaptec AS 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 Stocks Directory module to find actively traded stocks across global markets.