Correlation Between Axiomtek and Tex Ray

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

By analyzing existing cross correlation between Axiomtek Co and Tex Ray Industrial Co, you can compare the effects of market volatilities on Axiomtek and Tex Ray 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 Axiomtek with a short position of Tex Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axiomtek and Tex Ray.

Diversification Opportunities for Axiomtek and Tex Ray

-0.36

Correlation Coefficient

Axiomtek  Tex Ray

Very good diversification

The 3 months correlation between Axiomtek and Tex is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Axiomtek Co and Tex Ray Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Ray Industrial and Axiomtek 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 Axiomtek Co are associated (or correlated) with Tex Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Ray Industrial has no effect on the direction of Axiomtek i.e., Axiomtek and Tex Ray go up and down completely randomly.

Pair Corralation between Axiomtek and Tex Ray

Assuming the 90 days trading horizon Axiomtek Co is expected to generate 39.54 times more return on investment than Tex Ray. However, Axiomtek is 39.54 times more volatile than Tex Ray Industrial Co. It trades about 0.05 of its potential returns per unit of risk. Tex Ray Industrial Co is currently generating about -0.02 per unit of risk. If you would invest  5,188  in Axiomtek Co on October 26, 2024 and sell it today you would earn a total of  7,612  from holding Axiomtek Co or generate 146.72% return on investment over 90 days.

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

Axiomtek Co  vs.  Tex Ray Industrial Co

Axiomtek

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axiomtek Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Axiomtek showed solid returns over the last few months and may actually be approaching a breakup point.

Tex Ray Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tex Ray Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tex Ray is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Axiomtek and Tex Ray

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

The idea behind Axiomtek Co and Tex Ray Industrial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.