Correlation Between Axway Software and Scandic Hotels

Can any of the company-specific risk be diversified away by investing in both Axway Software and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Axway Software and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Scandic Hotels.

Diversification Opportunities for Axway Software and Scandic Hotels

0.32

Correlation Coefficient

Axway Software  Scandic Hotels

Weak diversification

The 3 months correlation between Axway and Scandic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Axway Software i.e., Axway Software and Scandic Hotels go up and down completely randomly.

Pair Corralation between Axway Software and Scandic Hotels

Assuming the 90 days trading horizon Axway Software SA is expected to generate 0.83 times more return on investment than Scandic Hotels. However, Axway Software SA is 1.2 times less risky than Scandic Hotels. It trades about 0.16 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.09 per unit of risk. If you would invest  2,720  in Axway Software SA on December 29, 2024 and sell it today you would earn a total of  420.00  from holding Axway Software SA or generate 15.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Axway Software SA  vs.  Scandic Hotels Group

Axway Software SA

Risk-Adjusted Performance

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 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Scandic Hotels Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scandic Hotels Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Scandic Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Axway Software and Scandic Hotels

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

The idea behind Axway Software SA and Scandic Hotels Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.