Correlation Between Goodtech and Axactor SE

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

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

Diversification Opportunities for Goodtech and Axactor SE

0.94

Correlation Coefficient

Goodtech  Axactor SE

Almost no diversification

The 3 months correlation between Goodtech and Axactor is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Goodtech and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE and Goodtech 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 Goodtech are associated (or correlated) with Axactor SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axactor SE has no effect on the direction of Goodtech i.e., Goodtech and Axactor SE go up and down completely randomly.

Pair Corralation between Goodtech and Axactor SE

Assuming the 90 days trading horizon Goodtech is expected to under-perform the Axactor SE. But the stock apears to be less risky and, when comparing its historical volatility, Goodtech is 1.09 times less risky than Axactor SE. The stock trades about -0.13 of its potential returns per unit of risk. The Axactor SE is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  414.00  in Axactor SE on September 5, 2024 and sell it today you would lose (71.00) from holding Axactor SE or give up 17.15% of portfolio value over 90 days.

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

Goodtech  vs.  Axactor SE

Goodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Axactor SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axactor SE 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Goodtech and Axactor SE

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

The idea behind Goodtech and Axactor SE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.