Correlation Between Starbreeze and Nitro Games

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

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

Diversification Opportunities for Starbreeze and Nitro Games

-0.47

Correlation Coefficient

Starbreeze  Nitro Games

Very good diversification

The 3 months correlation between Starbreeze and Nitro is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Starbreeze AB and Nitro Games Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitro Games Oyj and Starbreeze 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 Starbreeze AB are associated (or correlated) with Nitro Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitro Games Oyj has no effect on the direction of Starbreeze i.e., Starbreeze and Nitro Games go up and down completely randomly.

Pair Corralation between Starbreeze and Nitro Games

Assuming the 90 days trading horizon Starbreeze AB is expected to under-perform the Nitro Games. But the stock apears to be less risky and, when comparing its historical volatility, Starbreeze AB is 1.14 times less risky than Nitro Games. The stock trades about -0.09 of its potential returns per unit of risk. The Nitro Games Oyj is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  256.00  in Nitro Games Oyj on September 12, 2024 and sell it today you would lose (26.00) from holding Nitro Games Oyj or give up 10.16% of portfolio value over 90 days.

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

Starbreeze AB  vs.  Nitro Games Oyj

Starbreeze AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nitro Games Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nitro Games Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nitro Games 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 Starbreeze and Nitro Games

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

The idea behind Starbreeze AB and Nitro Games Oyj 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.