Correlation Between Axway Software and Oriental Land

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

Diversification Opportunities for Axway Software and Oriental Land

-0.3

Correlation Coefficient

Axway Software  Oriental Land

Very good diversification

The 3 months correlation between Axway and Oriental is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Oriental Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Land 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 Oriental Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Land has no effect on the direction of Axway Software i.e., Axway Software and Oriental Land go up and down completely randomly.

Pair Corralation between Axway Software and Oriental Land

Assuming the 90 days trading horizon Axway Software is expected to generate 1.86 times less return on investment than Oriental Land. But when comparing it to its historical volatility, Axway Software SA is 1.64 times less risky than Oriental Land. It trades about 0.05 of its potential returns per unit of risk. Oriental Land Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,058  in Oriental Land Co on October 11, 2024 and sell it today you would earn a total of  1,042  from holding Oriental Land Co or generate 98.49% return on investment over 90 days.

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

Axway Software SA  vs.  Oriental Land Co

Axway Software SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Axway Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Oriental Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oriental Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Oriental Land is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Axway Software and Oriental Land

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

The idea behind Axway Software SA and Oriental Land 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.

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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 Stocks Directory module to find actively traded stocks across global markets.