Correlation Between Axway Software and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Axway Software and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on Axway Software and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Axfood AB.
Diversification Opportunities for Axway Software and Axfood AB
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Axway and Axfood is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Axway Software i.e., Axway Software and Axfood AB go up and down completely randomly.
Pair Corralation between Axway Software and Axfood AB
Assuming the 90 days trading horizon Axway Software SA is expected to generate 3.54 times more return on investment than Axfood AB. However, Axway Software is 3.54 times more volatile than Axfood AB. It trades about 0.03 of its potential returns per unit of risk. Axfood AB is currently generating about -0.08 per unit of risk. If you would invest 2,600 in Axway Software SA on November 7, 2024 and sell it today you would earn a total of 60.00 from holding Axway Software SA or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Axway Software SA vs. Axfood AB
Performance |
| Timeline |
| Axway Software SA |
| Axfood AB |
Axway Software and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and Axfood AB
The main advantage of trading using opposite Axway Software and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Axway Software vs. Chrysalis Investments | Axway Software vs. Playtech Plc | Axway Software vs. Smithson Investment Trust | Axway Software vs. UNIQA Insurance Group |
| Axfood AB vs. Anglo Asian Mining | Axfood AB vs. Coeur Mining | Axfood AB vs. Scandic Hotels Group | Axfood AB vs. McEwen Mining |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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