Correlation Between Axway Software and Baker Steel

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

Diversification Opportunities for Axway Software and Baker Steel

-0.76

Correlation Coefficient

Axway Software  Baker Steel

Pay attention - limited upside

The 3 months correlation between Axway and Baker is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources 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 Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Axway Software i.e., Axway Software and Baker Steel go up and down completely randomly.

Pair Corralation between Axway Software and Baker Steel

Assuming the 90 days trading horizon Axway Software SA is expected to generate 0.71 times more return on investment than Baker Steel. However, Axway Software SA is 1.41 times less risky than Baker Steel. It trades about 0.22 of its potential returns per unit of risk. Baker Steel Resources is currently generating about -0.07 per unit of risk. If you would invest  2,690  in Axway Software SA on December 23, 2024 and sell it today you would earn a total of  530.00  from holding Axway Software SA or generate 19.7% return on investment over 90 days.

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

Axway Software SA  vs.  Baker Steel Resources

Axway Software SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 17 (%) 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.

Baker Steel Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baker Steel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Axway Software and Baker Steel

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

The idea behind Axway Software SA and Baker Steel Resources 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.