Correlation Between ALERION CLEANPOWER and Axway Software

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

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

Diversification Opportunities for ALERION CLEANPOWER and Axway Software

-0.51

Correlation Coefficient

ALERION CLEANPOWER  Axway Software

Excellent diversification

The 3 months correlation between ALERION and Axway is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Axway Software go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and Axway Software

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Axway Software. In addition to that, ALERION CLEANPOWER is 2.38 times more volatile than Axway Software SA. It trades about -0.04 of its total potential returns per unit of risk. Axway Software SA is currently generating about 0.16 per unit of volatility. If you would invest  2,690  in Axway Software SA on December 30, 2024 and sell it today you would earn a total of  390.00  from holding Axway Software SA or generate 14.5% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  Axway Software SA

ALERION CLEANPOWER

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALERION CLEANPOWER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Axway Software SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Axway Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALERION CLEANPOWER and Axway Software

The main advantage of trading using opposite ALERION CLEANPOWER and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER 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 ALERION CLEANPOWER 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.

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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.