Correlation Between Absolent Group and AXichem AB

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

By analyzing existing cross correlation between Absolent Group AB and aXichem AB, you can compare the effects of market volatilities on Absolent Group and AXichem AB 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 Absolent Group with a short position of AXichem AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolent Group and AXichem AB.

Diversification Opportunities for Absolent Group and AXichem AB

-0.12

Correlation Coefficient

Absolent Group  AXichem AB

Good diversification

The 3 months correlation between Absolent and AXichem is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Absolent Group AB and aXichem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aXichem AB and Absolent Group 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 Absolent Group AB are associated (or correlated) with AXichem AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aXichem AB has no effect on the direction of Absolent Group i.e., Absolent Group and AXichem AB go up and down completely randomly.

Pair Corralation between Absolent Group and AXichem AB

Assuming the 90 days trading horizon Absolent Group is expected to generate 2.2 times less return on investment than AXichem AB. But when comparing it to its historical volatility, Absolent Group AB is 3.28 times less risky than AXichem AB. It trades about 0.16 of its potential returns per unit of risk. aXichem AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  118.00  in aXichem AB on September 22, 2024 and sell it today you would earn a total of  12.00  from holding aXichem AB or generate 10.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Absolent Group AB  vs.  aXichem AB

Absolent Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolent Group AB 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

aXichem AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in aXichem AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, AXichem AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Absolent Group and AXichem AB

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

The idea behind Absolent Group AB and aXichem AB 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.