Correlation Between Axway Software and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Axway Software and STMicroelectronics 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 Axway Software and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axway Software SA and STMicroelectronics NV, you can compare the effects of market volatilities on Axway Software and STMicroelectronics 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 Axway Software with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and STMicroelectronics.
Diversification Opportunities for Axway Software and STMicroelectronics
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axway and STMicroelectronics is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Axway Software 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 Axway Software SA are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Axway Software i.e., Axway Software and STMicroelectronics go up and down completely randomly.
Pair Corralation between Axway Software and STMicroelectronics
Assuming the 90 days trading horizon Axway Software SA is expected to generate 3.02 times more return on investment than STMicroelectronics. However, Axway Software is 3.02 times more volatile than STMicroelectronics NV. It trades about 0.05 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.03 per unit of risk. If you would invest 1,444 in Axway Software SA on September 3, 2024 and sell it today you would earn a total of 1,326 from holding Axway Software SA or generate 91.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.79% |
| Values | Daily Returns |
Axway Software SA vs. STMicroelectronics NV
Performance |
| Timeline |
| Axway Software SA |
| STMicroelectronics |
Axway Software and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and STMicroelectronics
The main advantage of trading using opposite Axway Software and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Axway Software vs. Wheaton Precious Metals | Axway Software vs. Hochschild Mining plc | Axway Software vs. AMG Advanced Metallurgical | Axway Software vs. Jacquet Metal Service |
| STMicroelectronics vs. Deltex Medical Group | STMicroelectronics vs. Fevertree Drinks Plc | STMicroelectronics vs. Associated British Foods | STMicroelectronics vs. Medical Properties Trust |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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