Correlation Between Romerike Sparebank and Axactor SE

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

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

Diversification Opportunities for Romerike Sparebank and Axactor SE

0.58

Correlation Coefficient

Romerike Sparebank  Axactor SE

Very weak diversification

The 3 months correlation between Romerike and Axactor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Romerike Sparebank and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE and Romerike Sparebank 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 Romerike Sparebank 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 Romerike Sparebank i.e., Romerike Sparebank and Axactor SE go up and down completely randomly.

Pair Corralation between Romerike Sparebank and Axactor SE

Assuming the 90 days trading horizon Romerike Sparebank is expected to generate 2.99 times less return on investment than Axactor SE. But when comparing it to its historical volatility, Romerike Sparebank is 1.71 times less risky than Axactor SE. It trades about 0.12 of its potential returns per unit of risk. Axactor SE is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  345.00  in Axactor SE on November 29, 2024 and sell it today you would earn a total of  115.00  from holding Axactor SE or generate 33.33% return on investment over 90 days.

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

Romerike Sparebank  vs.  Axactor SE

Romerike Sparebank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Romerike Sparebank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Romerike Sparebank may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Axactor SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axactor SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Axactor SE disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Romerike Sparebank and Axactor SE

The main advantage of trading using opposite Romerike Sparebank and Axactor SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Romerike Sparebank 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 Romerike Sparebank 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.