Correlation Between Axway Software and Gfinity PLC

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

Diversification Opportunities for Axway Software and Gfinity PLC

0.05

Correlation Coefficient

Axway Software  Gfinity PLC

Significant diversification

The 3 months correlation between Axway and Gfinity is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC 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 Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Axway Software i.e., Axway Software and Gfinity PLC go up and down completely randomly.

Pair Corralation between Axway Software and Gfinity PLC

Assuming the 90 days trading horizon Axway Software is expected to generate 1.13 times less return on investment than Gfinity PLC. But when comparing it to its historical volatility, Axway Software SA is 1.64 times less risky than Gfinity PLC. It trades about 0.05 of its potential returns per unit of risk. Gfinity PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Gfinity PLC on October 24, 2024 and sell it today you would lose (4.25) from holding Gfinity PLC or give up 38.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.04%
Values	Daily Returns

Axway Software SA  vs.  Gfinity PLC

Axway Software SA

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Axway Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gfinity PLC

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gfinity PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gfinity PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axway Software and Gfinity PLC

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

The idea behind Axway Software SA and Gfinity PLC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.