Correlation Between Axway Software and Agrogeneration

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

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

Diversification Opportunities for Axway Software and Agrogeneration

-0.42

Correlation Coefficient

Axway Software  Agrogeneration

Very good diversification

The 3 months correlation between Axway and Agrogeneration is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software and Agrogeneration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrogeneration and Axway Software 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 Axway Software are associated (or correlated) with Agrogeneration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrogeneration has no effect on the direction of Axway Software i.e., Axway Software and Agrogeneration go up and down completely randomly.

Pair Corralation between Axway Software and Agrogeneration

Assuming the 90 days trading horizon Axway Software is expected to generate 0.18 times more return on investment than Agrogeneration. However, Axway Software is 5.51 times less risky than Agrogeneration. It trades about 0.23 of its potential returns per unit of risk. Agrogeneration is currently generating about 0.03 per unit of risk. If you would invest  2,390  in Axway Software on September 23, 2024 and sell it today you would earn a total of  360.00  from holding Axway Software or generate 15.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.39%
Values	Daily Returns

Axway Software  vs.  Agrogeneration

Axway Software

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Axway Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Axway Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Agrogeneration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agrogeneration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agrogeneration may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Axway Software and Agrogeneration

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

The idea behind Axway Software and Agrogeneration 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.