Correlation Between Axfood AB and Saga Plc
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Saga Plc 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 Axfood AB and Saga Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Saga plc, you can compare the effects of market volatilities on Axfood AB and Saga Plc 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 Axfood AB with a short position of Saga Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Saga Plc.
Diversification Opportunities for Axfood AB and Saga Plc
Pay attention - limited upside
The 3 months correlation between Axfood and Saga is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Saga plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga plc and Axfood AB 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 Axfood AB are associated (or correlated) with Saga Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga plc has no effect on the direction of Axfood AB i.e., Axfood AB and Saga Plc go up and down completely randomly.
Pair Corralation between Axfood AB and Saga Plc
Assuming the 90 days trading horizon Axfood AB is expected to under-perform the Saga Plc. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 2.67 times less risky than Saga Plc. The stock trades about -0.19 of its potential returns per unit of risk. The Saga plc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 12,440 in Saga plc on December 4, 2024 and sell it today you would lose (300.00) from holding Saga plc or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Axfood AB vs. Saga plc
Performance |
| Timeline |
| Axfood AB |
| Saga plc |
Axfood AB and Saga Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Saga Plc
The main advantage of trading using opposite Axfood AB and Saga Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Saga Plc 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 Saga Plc will offset losses from the drop in Saga Plc's long position.| Axfood AB vs. Westlake Chemical Corp | Axfood AB vs. Delta Air Lines | Axfood AB vs. Cornish Metals | Axfood AB vs. Silvercorp Metals |
| Saga Plc vs. MTI Wireless Edge | Saga Plc vs. Gamma Communications PLC | Saga Plc vs. Cellnex Telecom SA | Saga Plc vs. Orient Telecoms |
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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