Correlation Between CVR Energy and Axfood AB

Can any of the company-specific risk be diversified away by investing in both CVR Energy 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 CVR Energy and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVR Energy and Axfood AB, you can compare the effects of market volatilities on CVR Energy 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 CVR Energy with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Axfood AB.

Diversification Opportunities for CVR Energy and Axfood AB

-0.16

Correlation Coefficient

CVR Energy  Axfood AB

Good diversification

The 3 months correlation between CVR and Axfood is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Axfood AB go up and down completely randomly.

Pair Corralation between CVR Energy and Axfood AB

Assuming the 90 days trading horizon CVR Energy is expected to generate 2.62 times more return on investment than Axfood AB. However, CVR Energy is 2.62 times more volatile than Axfood AB. It trades about 0.06 of its potential returns per unit of risk. Axfood AB is currently generating about -0.01 per unit of risk. If you would invest  1,875  in CVR Energy on December 30, 2024 and sell it today you would earn a total of  156.00  from holding CVR Energy or generate 8.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

CVR Energy  vs.  Axfood AB

CVR Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVR Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Axfood AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axfood AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Axfood AB is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CVR Energy and Axfood AB

The main advantage of trading using opposite CVR Energy and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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.

The idea behind CVR Energy and Axfood AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.