Correlation Between Axway Software and Samsung Electronics

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

Diversification Opportunities for Axway Software and Samsung Electronics

0.5

Correlation Coefficient

Axway Software  Samsung Electronics

Very weak diversification

The 3 months correlation between Axway and Samsung is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Axway Software i.e., Axway Software and Samsung Electronics go up and down completely randomly.

Pair Corralation between Axway Software and Samsung Electronics

Assuming the 90 days trading horizon Axway Software SA is expected to generate 1.1 times more return on investment than Samsung Electronics. However, Axway Software is 1.1 times more volatile than Samsung Electronics Co. It trades about 0.09 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of risk. If you would invest  1,818  in Axway Software SA on December 2, 2024 and sell it today you would earn a total of  1,102  from holding Axway Software SA or generate 60.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.73%
Values	Daily Returns

Axway Software SA  vs.  Samsung Electronics Co

Axway Software SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 6 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Samsung Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Axway Software and Samsung Electronics

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

The idea behind Axway Software SA and Samsung Electronics Co 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.

Check out your portfolio center.

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.