Correlation Between AXWAY SOFTWARE and SIMS

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

Diversification Opportunities for AXWAY SOFTWARE and SIMS

0.41

Correlation Coefficient

AXWAY SOFTWARE  SIMS

Very weak diversification

The 3 months correlation between AXWAY and SIMS is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AXWAY SOFTWARE EO and SIMS LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS LTD ADR 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 SIMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS LTD ADR has no effect on the direction of AXWAY SOFTWARE i.e., AXWAY SOFTWARE and SIMS go up and down completely randomly.

Pair Corralation between AXWAY SOFTWARE and SIMS

Assuming the 90 days horizon AXWAY SOFTWARE is expected to generate 1.87 times less return on investment than SIMS. But when comparing it to its historical volatility, AXWAY SOFTWARE EO is 1.95 times less risky than SIMS. It trades about 0.17 of its potential returns per unit of risk. SIMS LTD ADR is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  695.00  in SIMS LTD ADR on December 19, 2024 and sell it today you would earn a total of  175.00  from holding SIMS LTD ADR or generate 25.18% return on investment over 90 days.

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

AXWAY SOFTWARE EO  vs.  SIMS LTD ADR

AXWAY SOFTWARE EO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AXWAY SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

SIMS LTD ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS LTD ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, SIMS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXWAY SOFTWARE and SIMS

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

The idea behind AXWAY SOFTWARE EO and SIMS LTD ADR 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.