Correlation Between Axfood AB and Viridian Therapeutics

Can any of the company-specific risk be diversified away by investing in both Axfood AB and Viridian Therapeutics 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 Axfood AB and Viridian Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axfood AB and Viridian Therapeutics, you can compare the effects of market volatilities on Axfood AB and Viridian Therapeutics 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 Axfood AB with a short position of Viridian Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Viridian Therapeutics.

Diversification Opportunities for Axfood AB and Viridian Therapeutics

0.21

Correlation Coefficient

Axfood AB  Viridian Therapeutics

Modest diversification

The 3 months correlation between Axfood and Viridian is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Viridian Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viridian Therapeutics and Axfood AB 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 Axfood AB are associated (or correlated) with Viridian Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viridian Therapeutics has no effect on the direction of Axfood AB i.e., Axfood AB and Viridian Therapeutics go up and down completely randomly.

Pair Corralation between Axfood AB and Viridian Therapeutics

Assuming the 90 days trading horizon Axfood AB is expected to generate 0.32 times more return on investment than Viridian Therapeutics. However, Axfood AB is 3.08 times less risky than Viridian Therapeutics. It trades about -0.02 of its potential returns per unit of risk. Viridian Therapeutics is currently generating about -0.09 per unit of risk. If you would invest  22,702  in Axfood AB on December 24, 2024 and sell it today you would lose (377.00) from holding Axfood AB or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Axfood AB  vs.  Viridian Therapeutics

Axfood AB

Risk-Adjusted Performance

Very Weak

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

Viridian Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viridian Therapeutics 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Axfood AB and Viridian Therapeutics

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

The idea behind Axfood AB and Viridian Therapeutics 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.