Correlation Between Holand Og and Axactor SE

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

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

Diversification Opportunities for Holand Og and Axactor SE

-0.7

Correlation Coefficient

Holand Og  Axactor SE

Excellent diversification

The 3 months correlation between Holand and Axactor is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Holand og Setskog and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE and Holand Og 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 Holand og Setskog 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 Holand Og i.e., Holand Og and Axactor SE go up and down completely randomly.

Pair Corralation between Holand Og and Axactor SE

Assuming the 90 days trading horizon Holand og Setskog is expected to generate 1.19 times more return on investment than Axactor SE. However, Holand Og is 1.19 times more volatile than Axactor SE. It trades about 0.13 of its potential returns per unit of risk. Axactor SE is currently generating about 0.16 per unit of risk. If you would invest  13,500  in Holand og Setskog on October 7, 2024 and sell it today you would earn a total of  1,000.00  from holding Holand og Setskog or generate 7.41% return on investment over 90 days.

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

Holand og Setskog  vs.  Axactor SE

Holand og Setskog

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holand og Setskog are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Holand Og disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 quite persistent basic indicators, Axactor SE is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Holand Og and Axactor SE

The main advantage of trading using opposite Holand Og and Axactor SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holand Og 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 Holand og Setskog 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.