Correlation Between Axfood AB and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Nexam Chemical 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 Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Nexam Chemical Holding, you can compare the effects of market volatilities on Axfood AB and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Nexam Chemical.
Diversification Opportunities for Axfood AB and Nexam Chemical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axfood and Nexam is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Axfood AB i.e., Axfood AB and Nexam Chemical go up and down completely randomly.
Pair Corralation between Axfood AB and Nexam Chemical
Assuming the 90 days trading horizon Axfood AB is expected to under-perform the Nexam Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 3.11 times less risky than Nexam Chemical. The stock trades about -0.18 of its potential returns per unit of risk. The Nexam Chemical Holding is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 395.00 in Nexam Chemical Holding on September 14, 2024 and sell it today you would lose (4.00) from holding Nexam Chemical Holding or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Nexam Chemical Holding
Performance |
| Timeline |
| Axfood AB |
| Nexam Chemical Holding |
Axfood AB and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Nexam Chemical
The main advantage of trading using opposite Axfood AB and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Axfood AB vs. Castellum AB | Axfood AB vs. Tele2 AB | Axfood AB vs. Investor AB ser | Axfood AB vs. Kinnevik Investment AB |
| Nexam Chemical vs. SSAB AB | Nexam Chemical vs. Svenska Cellulosa Aktiebolaget | Nexam Chemical vs. Axfood AB | Nexam Chemical vs. Proact IT Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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