Correlation Between Axway Software and CAP LEASE

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

Diversification Opportunities for Axway Software and CAP LEASE

-0.83

Correlation Coefficient

Axway Software  CAP LEASE

Pay attention - limited upside

The 3 months correlation between Axway and CAP is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION 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 CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Axway Software i.e., Axway Software and CAP LEASE go up and down completely randomly.

Pair Corralation between Axway Software and CAP LEASE

Assuming the 90 days trading horizon Axway Software SA is expected to generate 2.01 times more return on investment than CAP LEASE. However, Axway Software is 2.01 times more volatile than CAP LEASE AVIATION. It trades about 0.05 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.03 per unit of risk. If you would invest  1,596  in Axway Software SA on October 7, 2024 and sell it today you would earn a total of  1,084  from holding Axway Software SA or generate 67.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Axway Software SA  vs.  CAP LEASE AVIATION

Axway Software SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 11 (%) 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.

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Axway Software and CAP LEASE

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

The idea behind Axway Software SA and CAP LEASE AVIATION 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 Transaction History module to view history of all your transactions and understand their impact on performance.