Correlation Between Axway Software and Seche Environnem

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

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

Diversification Opportunities for Axway Software and Seche Environnem

-0.54

Correlation Coefficient

Axway Software  Seche Environnem

Excellent diversification

The 3 months correlation between Axway and Seche is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software and Seche Environnem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seche Environnem 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 Seche Environnem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seche Environnem has no effect on the direction of Axway Software i.e., Axway Software and Seche Environnem go up and down completely randomly.

Pair Corralation between Axway Software and Seche Environnem

Assuming the 90 days trading horizon Axway Software is expected to generate 0.65 times more return on investment than Seche Environnem. However, Axway Software is 1.53 times less risky than Seche Environnem. It trades about 0.24 of its potential returns per unit of risk. Seche Environnem is currently generating about -0.15 per unit of risk. If you would invest  2,300  in Axway Software on August 31, 2024 and sell it today you would earn a total of  440.00  from holding Axway Software or generate 19.13% return on investment over 90 days.

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

Axway Software  vs.  Seche Environnem

Axway Software

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software are ranked lower than 19 (%) 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.

Seche Environnem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seche Environnem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Axway Software and Seche Environnem

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

The idea behind Axway Software and Seche Environnem 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.