Correlation Between Les Hotels and Axway Software
Can any of the company-specific risk be diversified away by investing in both Les Hotels and Axway Software 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 Les Hotels and Axway Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Les Hotels Bav and Axway Software, you can compare the effects of market volatilities on Les Hotels and Axway Software 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 Les Hotels with a short position of Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and Axway Software.
Diversification Opportunities for Les Hotels and Axway Software
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Les and Axway is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and Axway Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software and Les Hotels 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 Les Hotels Bav are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software has no effect on the direction of Les Hotels i.e., Les Hotels and Axway Software go up and down completely randomly.
Pair Corralation between Les Hotels and Axway Software
Assuming the 90 days trading horizon Les Hotels is expected to generate 79.67 times less return on investment than Axway Software. But when comparing it to its historical volatility, Les Hotels Bav is 1.41 times less risky than Axway Software. It trades about 0.0 of its potential returns per unit of risk. Axway Software is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,700 in Axway Software on August 26, 2024 and sell it today you would earn a total of 70.00 from holding Axway Software or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Les Hotels Bav vs. Axway Software
Performance |
| Timeline |
| Les Hotels Bav |
| Axway Software |
Les Hotels and Axway Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and Axway Software
The main advantage of trading using opposite Les Hotels and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels position performs unexpectedly, Axway Software 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 Axway Software will offset losses from the drop in Axway Software's long position.| Les Hotels vs. Les Htels de | Les Hotels vs. Moulinvest | Les Hotels vs. Bernard Loisea | Les Hotels vs. Groupimo SA |
| Axway Software vs. Sopra Steria Group | Axway Software vs. Aubay Socit Anonyme | Axway Software vs. Lectra SA | Axway Software vs. Esker SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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