Correlation Between Axfood AB and Neometals

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

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

Diversification Opportunities for Axfood AB and Neometals

0.22

Correlation Coefficient

Axfood AB  Neometals

Modest diversification

The 3 months correlation between Axfood and Neometals is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals and Axfood AB 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 Axfood AB are associated (or correlated) with Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Axfood AB i.e., Axfood AB and Neometals go up and down completely randomly.

Pair Corralation between Axfood AB and Neometals

Assuming the 90 days trading horizon Axfood AB is expected to under-perform the Neometals. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 3.26 times less risky than Neometals. The stock trades about -0.14 of its potential returns per unit of risk. The Neometals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Neometals on September 4, 2024 and sell it today you would lose (75.00) from holding Neometals or give up 13.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Axfood AB  vs.  Neometals

Axfood AB

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Axfood AB and Neometals

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

The idea behind Axfood AB and Neometals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..