Correlation Between Axactor SE and Romerike Sparebank

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

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

Diversification Opportunities for Axactor SE and Romerike Sparebank

-0.48

Correlation Coefficient

Axactor SE  Romerike Sparebank

Very good diversification

The 3 months correlation between Axactor and Romerike is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Axactor SE and Romerike Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romerike Sparebank 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 Romerike Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romerike Sparebank has no effect on the direction of Axactor SE i.e., Axactor SE and Romerike Sparebank go up and down completely randomly.

Pair Corralation between Axactor SE and Romerike Sparebank

Assuming the 90 days trading horizon Axactor SE is expected to under-perform the Romerike Sparebank. In addition to that, Axactor SE is 2.37 times more volatile than Romerike Sparebank. It trades about -0.16 of its total potential returns per unit of risk. Romerike Sparebank is currently generating about 0.02 per unit of volatility. If you would invest  12,498  in Romerike Sparebank on August 31, 2024 and sell it today you would earn a total of  82.00  from holding Romerike Sparebank or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Axactor SE  vs.  Romerike Sparebank

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.

Romerike Sparebank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Romerike Sparebank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Romerike Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Axactor SE and Romerike Sparebank

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

The idea behind Axactor SE and Romerike Sparebank 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.