Correlation Between Axway Software and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Axway Software and Tsingtao Brewery 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 Tsingtao Brewery 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 Tsingtao Brewery, you can compare the effects of market volatilities on Axway Software and Tsingtao Brewery 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 Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Tsingtao Brewery.
Diversification Opportunities for Axway Software and Tsingtao Brewery
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Axway and Tsingtao is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of Axway Software i.e., Axway Software and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Axway Software and Tsingtao Brewery
Assuming the 90 days trading horizon Axway Software SA is expected to generate 1.34 times more return on investment than Tsingtao Brewery. However, Axway Software is 1.34 times more volatile than Tsingtao Brewery. It trades about 0.01 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about -0.25 per unit of risk. If you would invest 2,680 in Axway Software SA on October 13, 2024 and sell it today you would earn a total of 0.00 from holding Axway Software SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axway Software SA vs. Tsingtao Brewery
Performance |
| Timeline |
| Axway Software SA |
| Tsingtao Brewery |
Axway Software and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and Tsingtao Brewery
The main advantage of trading using opposite Axway Software and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, Tsingtao Brewery 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 Tsingtao Brewery will offset losses from the drop in Tsingtao Brewery's long position.| Axway Software vs. CanSino Biologics | Axway Software vs. Entravision Communications | Axway Software vs. ETFS Coffee ETC | Axway Software vs. ScanSource |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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