Correlation Between GOLD ROAD and Axway Software

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

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

Diversification Opportunities for GOLD ROAD and Axway Software

-0.24

Correlation Coefficient

GOLD ROAD  Axway Software

Very good diversification

The 3 months correlation between GOLD and Axway is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software SA and GOLD ROAD 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 GOLD ROAD RES are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Axway Software go up and down completely randomly.

Pair Corralation between GOLD ROAD and Axway Software

Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.66 times more return on investment than Axway Software. However, GOLD ROAD is 1.66 times more volatile than Axway Software SA. It trades about 0.04 of its potential returns per unit of risk. Axway Software SA is currently generating about 0.03 per unit of risk. If you would invest  96.00  in GOLD ROAD RES on October 25, 2024 and sell it today you would earn a total of  51.00  from holding GOLD ROAD RES or generate 53.13% return on investment over 90 days.

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

GOLD ROAD RES  vs.  Axway Software SA

GOLD ROAD RES

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Axway Software SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axway Software SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Axway Software is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GOLD ROAD and Axway Software

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

The idea behind GOLD ROAD RES and Axway Software 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.