Correlation Between Axway Software and Cembra Money

Can any of the company-specific risk be diversified away by investing in both Axway Software and Cembra Money 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 Cembra Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axway Software SA and Cembra Money Bank, you can compare the effects of market volatilities on Axway Software and Cembra Money 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 Cembra Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Cembra Money.

Diversification Opportunities for Axway Software and Cembra Money

0.2

Correlation Coefficient

Axway Software  Cembra Money

Modest diversification

The 3 months correlation between Axway and Cembra is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Cembra Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cembra Money Bank 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 SA are associated (or correlated) with Cembra Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cembra Money Bank has no effect on the direction of Axway Software i.e., Axway Software and Cembra Money go up and down completely randomly.

Pair Corralation between Axway Software and Cembra Money

Assuming the 90 days trading horizon Axway Software SA is expected to under-perform the Cembra Money. But the stock apears to be less risky and, when comparing its historical volatility, Axway Software SA is 1.42 times less risky than Cembra Money. The stock trades about -0.01 of its potential returns per unit of risk. The Cembra Money Bank is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  7,950  in Cembra Money Bank on October 22, 2024 and sell it today you would earn a total of  828.00  from holding Cembra Money Bank or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.12%
Values	Daily Returns

Axway Software SA  vs.  Cembra Money Bank

Axway Software SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Axway Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cembra Money Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cembra Money may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Axway Software and Cembra Money

The main advantage of trading using opposite Axway Software and Cembra Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, Cembra Money 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 Cembra Money will offset losses from the drop in Cembra Money's long position.

The idea behind Axway Software SA and Cembra Money Bank 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.