Correlation Between AXichem AB and AAC Clyde

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

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

Diversification Opportunities for AXichem AB and AAC Clyde

0.0

Correlation Coefficient

AXichem AB  AAC Clyde

Pay attention - limited upside

The 3 months correlation between AXichem and AAC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding aXichem AB and AAC Clyde Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Clyde Space and AXichem AB 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 aXichem AB are associated (or correlated) with AAC Clyde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Clyde Space has no effect on the direction of AXichem AB i.e., AXichem AB and AAC Clyde go up and down completely randomly.

Pair Corralation between AXichem AB and AAC Clyde

Assuming the 90 days trading horizon aXichem AB is expected to generate 2.75 times more return on investment than AAC Clyde. However, AXichem AB is 2.75 times more volatile than AAC Clyde Space. It trades about 0.1 of its potential returns per unit of risk. AAC Clyde Space is currently generating about 0.08 per unit of risk. 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	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

aXichem AB  vs.  AAC Clyde Space

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.

AAC Clyde Space

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, AAC Clyde unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXichem AB and AAC Clyde

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

The idea behind aXichem AB and AAC Clyde Space 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.