Correlation Between Triboron International and AXichem AB

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

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

Diversification Opportunities for Triboron International and AXichem AB

0.38

Correlation Coefficient

Triboron International  AXichem AB

Weak diversification

The 3 months correlation between Triboron and AXichem is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Triboron International AB and aXichem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aXichem AB and Triboron 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 Triboron International AB are associated (or correlated) with AXichem AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aXichem AB has no effect on the direction of Triboron International i.e., Triboron International and AXichem AB go up and down completely randomly.

Pair Corralation between Triboron International and AXichem AB

Assuming the 90 days trading horizon Triboron International AB is expected to under-perform the AXichem AB. But the stock apears to be less risky and, when comparing its historical volatility, Triboron International AB is 1.34 times less risky than AXichem AB. The stock trades about -0.2 of its potential returns per unit of risk. The aXichem AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  118.00  in aXichem AB on September 22, 2024 and sell it today you would earn a total of  12.00  from holding aXichem AB or generate 10.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Triboron International AB  vs.  aXichem AB

Triboron International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triboron International AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Triboron International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

aXichem AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in aXichem AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, AXichem AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triboron International and AXichem AB

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

The idea behind Triboron International AB and aXichem 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.