Correlation Between Endo International and Axway Software

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

By analyzing existing cross correlation between Endo International PLC and Axway Software SA, you can compare the effects of market volatilities on Endo International and Axway Software 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 Endo International with a short position of Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endo International and Axway Software.

Diversification Opportunities for Endo International and Axway Software

-0.84

Correlation Coefficient

Endo International  Axway Software

Pay attention - limited upside

The 3 months correlation between Endo and Axway is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Endo International PLC and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software SA and Endo 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 Endo International PLC are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of Endo International i.e., Endo International and Axway Software go up and down completely randomly.

Pair Corralation between Endo International and Axway Software

Assuming the 90 days trading horizon Endo International PLC is expected to under-perform the Axway Software. In addition to that, Endo International is 2.06 times more volatile than Axway Software SA. It trades about -0.05 of its total potential returns per unit of risk. Axway Software SA is currently generating about 0.05 per unit of volatility. If you would invest  2,750  in Axway Software SA on September 21, 2024 and sell it today you would earn a total of  10.00  from holding Axway Software SA or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Endo International PLC  vs.  Axway Software SA

Endo International PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endo International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Axway Software SA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Axway Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endo International and Axway Software

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

The idea behind Endo International PLC and Axway Software SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.