Correlation Between EMBARK EDUCATION and Axway Software

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

By analyzing existing cross correlation between EMBARK EDUCATION LTD and Axway Software SA, you can compare the effects of market volatilities on EMBARK EDUCATION and Axway Software 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 EMBARK EDUCATION with a short position of Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARK EDUCATION and Axway Software.

Diversification Opportunities for EMBARK EDUCATION and Axway Software

-0.04

Correlation Coefficient

EMBARK EDUCATION  Axway Software

Good diversification

The 3 months correlation between EMBARK and Axway is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding EMBARK EDUCATION LTD and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software SA and EMBARK EDUCATION 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 EMBARK EDUCATION LTD are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of EMBARK EDUCATION i.e., EMBARK EDUCATION and Axway Software go up and down completely randomly.

Pair Corralation between EMBARK EDUCATION and Axway Software

Assuming the 90 days horizon EMBARK EDUCATION is expected to generate 117.56 times less return on investment than Axway Software. But when comparing it to its historical volatility, EMBARK EDUCATION LTD is 2.52 times less risky than Axway Software. It trades about 0.0 of its potential returns per unit of risk. Axway Software SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,670  in Axway Software SA on December 22, 2024 and sell it today you would earn a total of  340.00  from holding Axway Software SA or generate 12.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

EMBARK EDUCATION LTD  vs.  Axway Software SA

EMBARK EDUCATION LTD

Risk-Adjusted Performance

Very Weak

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

Axway Software SA

Risk-Adjusted Performance

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 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMBARK EDUCATION and Axway Software

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

The idea behind EMBARK EDUCATION LTD and Axway Software SA 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 Global Correlations module to find global opportunities by holding instruments from different markets.