Correlation Between Ageas SANV and Axway Software

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

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

Diversification Opportunities for Ageas SANV and Axway Software

0.55

Correlation Coefficient

Ageas SANV  Axway Software

Very weak diversification

The 3 months correlation between Ageas and Axway is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ageas SANV and Axway Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software and Ageas SANV 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 ageas SANV 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 has no effect on the direction of Ageas SANV i.e., Ageas SANV and Axway Software go up and down completely randomly.

Pair Corralation between Ageas SANV and Axway Software

Assuming the 90 days trading horizon ageas SANV is expected to generate 0.93 times more return on investment than Axway Software. However, ageas SANV is 1.07 times less risky than Axway Software. It trades about -0.04 of its potential returns per unit of risk. Axway Software is currently generating about -0.07 per unit of risk. If you would invest  4,810  in ageas SANV on September 4, 2024 and sell it today you would lose (36.00) from holding ageas SANV or give up 0.75% of portfolio value over 90 days.

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

ageas SANV  vs.  Axway Software

ageas SANV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ageas SANV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Ageas SANV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Axway Software

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Axway Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ageas SANV and Axway Software

The main advantage of trading using opposite Ageas SANV and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ageas SANV 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 ageas SANV and Axway Software 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.