Correlation Between Ceres Power and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Ceres Power and Axfood AB 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 Ceres Power and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceres Power Holdings and Axfood AB, you can compare the effects of market volatilities on Ceres Power and Axfood AB 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 Ceres Power with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceres Power and Axfood AB.
Diversification Opportunities for Ceres Power and Axfood AB
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ceres and Axfood is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ceres Power Holdings and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and Ceres Power 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 Ceres Power Holdings are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Ceres Power i.e., Ceres Power and Axfood AB go up and down completely randomly.
Pair Corralation between Ceres Power and Axfood AB
Assuming the 90 days trading horizon Ceres Power Holdings is expected to generate 3.87 times more return on investment than Axfood AB. However, Ceres Power is 3.87 times more volatile than Axfood AB. It trades about 0.21 of its potential returns per unit of risk. Axfood AB is currently generating about 0.04 per unit of risk. If you would invest 17,100 in Ceres Power Holdings on October 9, 2024 and sell it today you would earn a total of 1,720 from holding Ceres Power Holdings or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ceres Power Holdings vs. Axfood AB
Performance |
| Timeline |
| Ceres Power Holdings |
| Axfood AB |
Ceres Power and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceres Power and Axfood AB
The main advantage of trading using opposite Ceres Power and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceres Power position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Ceres Power vs. International Consolidated Airlines | Ceres Power vs. Zurich Insurance Group | Ceres Power vs. Raymond James Financial | Ceres Power vs. FinecoBank SpA |
| Axfood AB vs. Walmart | Axfood AB vs. BYD Co | Axfood AB vs. Volkswagen AG | Axfood AB vs. Volkswagen AG Non Vtg |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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