Correlation Between Transport International and Axfood AB

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

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

Diversification Opportunities for Transport International and Axfood AB

-0.11

Correlation Coefficient

Transport International  Axfood AB

Good diversification

The 3 months correlation between Transport and Axfood is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and Transport International 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 Transport International Holdings are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Transport International i.e., Transport International and Axfood AB go up and down completely randomly.

Pair Corralation between Transport International and Axfood AB

Assuming the 90 days horizon Transport International is expected to generate 2.39 times less return on investment than Axfood AB. In addition to that, Transport International is 1.21 times more volatile than Axfood AB. It trades about 0.02 of its total potential returns per unit of risk. Axfood AB is currently generating about 0.05 per unit of volatility. If you would invest  1,963  in Axfood AB on December 23, 2024 and sell it today you would earn a total of  90.00  from holding Axfood AB or generate 4.58% return on investment over 90 days.

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

Transport International Holdin  vs.  Axfood AB

Transport International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transport International Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Transport International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Axfood AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axfood AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Axfood AB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Transport International and Axfood AB

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

The idea behind Transport International Holdings and Axfood AB 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.