Correlation Between Axactor SE and Bavarian Nordic

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

By analyzing existing cross correlation between Axactor SE and Bavarian Nordic, you can compare the effects of market volatilities on Axactor SE and Bavarian Nordic 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 Axactor SE with a short position of Bavarian Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axactor SE and Bavarian Nordic.

Diversification Opportunities for Axactor SE and Bavarian Nordic

0.79

Correlation Coefficient

Axactor SE  Bavarian Nordic

Poor diversification

The 3 months correlation between Axactor and Bavarian is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Axactor SE and Bavarian Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic and Axactor SE 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 Axactor SE are associated (or correlated) with Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic has no effect on the direction of Axactor SE i.e., Axactor SE and Bavarian Nordic go up and down completely randomly.

Pair Corralation between Axactor SE and Bavarian Nordic

Assuming the 90 days trading horizon Axactor SE is expected to generate 0.73 times more return on investment than Bavarian Nordic. However, Axactor SE is 1.38 times less risky than Bavarian Nordic. It trades about -0.16 of its potential returns per unit of risk. Bavarian Nordic is currently generating about -0.13 per unit of risk. If you would invest  450.00  in Axactor SE on August 31, 2024 and sell it today you would lose (105.00) from holding Axactor SE or give up 23.33% of portfolio value over 90 days.

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

Axactor SE  vs.  Bavarian Nordic

Axactor SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axactor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Axactor SE and Bavarian Nordic

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

The idea behind Axactor SE and Bavarian Nordic 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.