Correlation Between Axway Software and Innelec Multimedia
Can any of the company-specific risk be diversified away by investing in both Axway Software and Innelec Multimedia 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 Innelec Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axway Software and Innelec Multimedia, you can compare the effects of market volatilities on Axway Software and Innelec Multimedia 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 Innelec Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Innelec Multimedia.
Diversification Opportunities for Axway Software and Innelec Multimedia
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Axway and Innelec is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software and Innelec Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innelec Multimedia 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 are associated (or correlated) with Innelec Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innelec Multimedia has no effect on the direction of Axway Software i.e., Axway Software and Innelec Multimedia go up and down completely randomly.
Pair Corralation between Axway Software and Innelec Multimedia
Assuming the 90 days trading horizon Axway Software is expected to generate 0.47 times more return on investment than Innelec Multimedia. However, Axway Software is 2.12 times less risky than Innelec Multimedia. It trades about 0.08 of its potential returns per unit of risk. Innelec Multimedia is currently generating about -0.02 per unit of risk. If you would invest 1,444 in Axway Software on September 12, 2024 and sell it today you would earn a total of 1,296 from holding Axway Software or generate 89.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axway Software vs. Innelec Multimedia
Performance |
| Timeline |
| Axway Software |
| Innelec Multimedia |
Axway Software and Innelec Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and Innelec Multimedia
The main advantage of trading using opposite Axway Software and Innelec Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, Innelec Multimedia 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 Innelec Multimedia will offset losses from the drop in Innelec Multimedia's long position.| Axway Software vs. Groupe Guillin SA | Axway Software vs. Stef SA | Axway Software vs. SA Catana Group | Axway Software vs. Jacquet Metal Service |
| Innelec Multimedia vs. Lacroix Group SA | Innelec Multimedia vs. Damartex | Innelec Multimedia vs. BigBen Interactive | Innelec Multimedia vs. Clasquin |
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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