Correlation Between Axway Software and SA Catana

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

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

Diversification Opportunities for Axway Software and SA Catana

0.32

Correlation Coefficient

Axway Software  SA Catana

Weak diversification

The 3 months correlation between Axway and CATG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software and SA Catana Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SA Catana Group 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 SA Catana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SA Catana Group has no effect on the direction of Axway Software i.e., Axway Software and SA Catana go up and down completely randomly.

Pair Corralation between Axway Software and SA Catana

Assuming the 90 days trading horizon Axway Software is expected to generate 0.49 times more return on investment than SA Catana. However, Axway Software is 2.03 times less risky than SA Catana. It trades about 0.26 of its potential returns per unit of risk. SA Catana Group is currently generating about 0.04 per unit of risk. If you would invest  2,310  in Axway Software on September 18, 2024 and sell it today you would earn a total of  440.00  from holding Axway Software or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Axway Software  vs.  SA Catana Group

Axway Software

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software are ranked lower than 20 (%) 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.

SA Catana Group

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SA Catana Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SA Catana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Axway Software and SA Catana

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

The idea behind Axway Software and SA Catana Group 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.