Correlation Between Axway Software and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Axway Software and Smithson Investment 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 Smithson Investment 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 Smithson Investment Trust, you can compare the effects of market volatilities on Axway Software and Smithson Investment 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 Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Smithson Investment.
Diversification Opportunities for Axway Software and Smithson Investment
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Axway and Smithson is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust 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 Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Axway Software i.e., Axway Software and Smithson Investment go up and down completely randomly.
Pair Corralation between Axway Software and Smithson Investment
Assuming the 90 days trading horizon Axway Software SA is expected to generate 1.43 times more return on investment than Smithson Investment. However, Axway Software is 1.43 times more volatile than Smithson Investment Trust. It trades about 0.14 of its potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.15 per unit of risk. If you would invest 2,670 in Axway Software SA on August 27, 2024 and sell it today you would earn a total of 80.00 from holding Axway Software SA or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
Axway Software SA vs. Smithson Investment Trust
Performance |
| Timeline |
| Axway Software SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Smithson Investment Trust |
Axway Software and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and Smithson Investment
The main advantage of trading using opposite Axway Software and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, Smithson Investment 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Axway Software vs. Samsung Electronics Co | Axway Software vs. Samsung Electronics Co | Axway Software vs. Hyundai Motor | Axway Software vs. Toyota Motor Corp |
| Smithson Investment vs. Bisichi Mining PLC | Smithson Investment vs. Neometals | Smithson Investment vs. Invesco Physical Silver | Smithson Investment vs. Cornish Metals |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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