Correlation Between RTW Venture and Axfood AB

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

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

Diversification Opportunities for RTW Venture and Axfood AB

0.1

Correlation Coefficient

RTW Venture  Axfood AB

Average diversification

The 3 months correlation between RTW and Axfood is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding RTW Venture Fund and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and RTW Venture 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 RTW Venture Fund 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 RTW Venture i.e., RTW Venture and Axfood AB go up and down completely randomly.

Pair Corralation between RTW Venture and Axfood AB

Assuming the 90 days trading horizon RTW Venture Fund is expected to under-perform the Axfood AB. In addition to that, RTW Venture is 1.19 times more volatile than Axfood AB. It trades about -0.16 of its total potential returns per unit of risk. Axfood AB is currently generating about -0.01 per unit of volatility. If you would invest  23,006  in Axfood AB on December 30, 2024 and sell it today you would lose (206.00) from holding Axfood AB or give up 0.9% of portfolio value over 90 days.

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

RTW Venture Fund  vs.  Axfood AB

RTW Venture Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Axfood AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axfood AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Axfood AB is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RTW Venture and Axfood AB

The main advantage of trading using opposite RTW Venture and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTW Venture 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 RTW Venture Fund 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.