Correlation Between Hotel Majestic and Axway Software
Can any of the company-specific risk be diversified away by investing in both Hotel Majestic 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 Hotel Majestic and Axway Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Majestic Cannes and Axway Software, you can compare the effects of market volatilities on Hotel Majestic 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 Hotel Majestic with a short position of Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Majestic and Axway Software.
Diversification Opportunities for Hotel Majestic and Axway Software
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hotel and Axway is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Majestic Cannes and Axway Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software and Hotel Majestic 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 Hotel Majestic Cannes 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 Hotel Majestic i.e., Hotel Majestic and Axway Software go up and down completely randomly.
Pair Corralation between Hotel Majestic and Axway Software
Assuming the 90 days trading horizon Hotel Majestic Cannes is expected to under-perform the Axway Software. In addition to that, Hotel Majestic is 1.16 times more volatile than Axway Software. It trades about -0.01 of its total potential returns per unit of risk. Axway Software is currently generating about 0.11 per unit of volatility. If you would invest 2,173 in Axway Software on August 29, 2024 and sell it today you would earn a total of 577.00 from holding Axway Software or generate 26.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Majestic Cannes vs. Axway Software
Performance |
| Timeline |
| Hotel Majestic Cannes |
| Axway Software |
Hotel Majestic and Axway Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Majestic and Axway Software
The main advantage of trading using opposite Hotel Majestic and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Majestic 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.| Hotel Majestic vs. Accor S A | Hotel Majestic vs. Ferm Casino Mun | Hotel Majestic vs. Les Hotels Bav | Hotel Majestic vs. Hoteles Bestprice SA |
| Axway Software vs. Aubay Socit Anonyme | Axway Software vs. Infotel SA | Axway Software vs. IT Link | Axway Software vs. Manitou BF 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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