Correlation Between Axfood AB and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Zegona Communications 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 Zegona Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Zegona Communications Plc, you can compare the effects of market volatilities on Axfood AB and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Zegona Communications.
Diversification Opportunities for Axfood AB and Zegona Communications
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Axfood and Zegona is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Axfood AB i.e., Axfood AB and Zegona Communications go up and down completely randomly.
Pair Corralation between Axfood AB and Zegona Communications
Assuming the 90 days trading horizon Axfood AB is expected to generate 8.16 times less return on investment than Zegona Communications. But when comparing it to its historical volatility, Axfood AB is 1.66 times less risky than Zegona Communications. It trades about 0.04 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 42,400 in Zegona Communications Plc on November 4, 2024 and sell it today you would earn a total of 4,600 from holding Zegona Communications Plc or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Zegona Communications Plc
Performance |
| Timeline |
| Axfood AB |
| Zegona Communications Plc |
Axfood AB and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Zegona Communications
The main advantage of trading using opposite Axfood AB and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' long position.| Axfood AB vs. Golden Metal Resources | Axfood AB vs. Host Hotels Resorts | Axfood AB vs. Endeavour Mining Corp | Axfood AB vs. Atalaya Mining |
| Zegona Communications vs. Eastman Chemical Co | Zegona Communications vs. CAP LEASE AVIATION | Zegona Communications vs. First Majestic Silver | Zegona Communications vs. STMicroelectronics NV |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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