Correlation Between AXWAY SOFTWARE and Alfa Financial

Can any of the company-specific risk be diversified away by investing in both AXWAY SOFTWARE and Alfa Financial 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 Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AXWAY SOFTWARE EO and Alfa Financial Software, you can compare the effects of market volatilities on AXWAY SOFTWARE and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXWAY SOFTWARE and Alfa Financial.

Diversification Opportunities for AXWAY SOFTWARE and Alfa Financial

0.65

Correlation Coefficient

AXWAY SOFTWARE  Alfa Financial

Poor diversification

The 3 months correlation between AXWAY and Alfa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AXWAY SOFTWARE EO and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 EO are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of AXWAY SOFTWARE i.e., AXWAY SOFTWARE and Alfa Financial go up and down completely randomly.

Pair Corralation between AXWAY SOFTWARE and Alfa Financial

Assuming the 90 days horizon AXWAY SOFTWARE is expected to generate 3.05 times less return on investment than Alfa Financial. But when comparing it to its historical volatility, AXWAY SOFTWARE EO is 1.53 times less risky than Alfa Financial. It trades about 0.06 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Alfa Financial Software on December 4, 2024 and sell it today you would earn a total of  30.00  from holding Alfa Financial Software or generate 12.0% return on investment over 90 days.

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

AXWAY SOFTWARE EO  vs.  Alfa Financial Software

AXWAY SOFTWARE EO

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AXWAY SOFTWARE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Alfa Financial Software

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXWAY SOFTWARE and Alfa Financial

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

The idea behind AXWAY SOFTWARE EO and Alfa Financial Software 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.