Correlation Between Axway Software and Lion Biotechnologies

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

Diversification Opportunities for Axway Software and Lion Biotechnologies

-0.02

Correlation Coefficient

Axway Software  Lion Biotechnologies

Good diversification

The 3 months correlation between Axway and Lion is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies 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 Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Axway Software i.e., Axway Software and Lion Biotechnologies go up and down completely randomly.

Pair Corralation between Axway Software and Lion Biotechnologies

Assuming the 90 days trading horizon Axway Software is expected to generate 22.02 times less return on investment than Lion Biotechnologies. But when comparing it to its historical volatility, Axway Software SA is 3.53 times less risky than Lion Biotechnologies. It trades about 0.0 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  854.00  in Lion Biotechnologies on October 7, 2024 and sell it today you would lose (121.00) from holding Lion Biotechnologies or give up 14.17% of portfolio value over 90 days.

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

Axway Software SA  vs.  Lion Biotechnologies

Axway Software SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Axway Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lion Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Biotechnologies 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Axway Software and Lion Biotechnologies

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

The idea behind Axway Software SA and Lion Biotechnologies 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.