Correlation Between Akwel SA and Poxel SA

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

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

Diversification Opportunities for Akwel SA and Poxel SA

0.16

Correlation Coefficient

Akwel SA  Poxel SA

Average diversification

The 3 months correlation between Akwel and Poxel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Akwel SA and Poxel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poxel SA and Akwel SA 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 Akwel SA are associated (or correlated) with Poxel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poxel SA has no effect on the direction of Akwel SA i.e., Akwel SA and Poxel SA go up and down completely randomly.

Pair Corralation between Akwel SA and Poxel SA

Assuming the 90 days trading horizon Akwel SA is expected to under-perform the Poxel SA. But the stock apears to be less risky and, when comparing its historical volatility, Akwel SA is 6.82 times less risky than Poxel SA. The stock trades about -0.11 of its potential returns per unit of risk. The Poxel SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Poxel SA on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Poxel SA or generate 71.43% return on investment over 90 days.

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

Akwel SA  vs.  Poxel SA

Akwel SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akwel SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Poxel SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Poxel SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Poxel SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Akwel SA and Poxel SA

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

The idea behind Akwel SA and Poxel 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.