Correlation Between AXWAY SOFTWARE and Hongkong Land

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

By analyzing existing cross correlation between AXWAY SOFTWARE EO and Hongkong Land Holdings, you can compare the effects of market volatilities on AXWAY SOFTWARE and Hongkong Land 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 AXWAY SOFTWARE with a short position of Hongkong Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXWAY SOFTWARE and Hongkong Land.

Diversification Opportunities for AXWAY SOFTWARE and Hongkong Land

0.9

Correlation Coefficient

AXWAY SOFTWARE  Hongkong Land

Almost no diversification

The 3 months correlation between AXWAY and Hongkong is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AXWAY SOFTWARE EO and Hongkong Land Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongkong Land Holdings and AXWAY SOFTWARE 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 AXWAY SOFTWARE EO are associated (or correlated) with Hongkong Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongkong Land Holdings has no effect on the direction of AXWAY SOFTWARE i.e., AXWAY SOFTWARE and Hongkong Land go up and down completely randomly.

Pair Corralation between AXWAY SOFTWARE and Hongkong Land

Assuming the 90 days horizon AXWAY SOFTWARE EO is expected to under-perform the Hongkong Land. But the stock apears to be less risky and, when comparing its historical volatility, AXWAY SOFTWARE EO is 2.09 times less risky than Hongkong Land. The stock trades about -0.08 of its potential returns per unit of risk. The Hongkong Land Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  432.00  in Hongkong Land Holdings on September 17, 2024 and sell it today you would earn a total of  4.00  from holding Hongkong Land Holdings or generate 0.93% return on investment over 90 days.

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

AXWAY SOFTWARE EO  vs.  Hongkong Land Holdings

AXWAY SOFTWARE EO

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AXWAY SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Hongkong Land Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hongkong Land Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Hongkong Land reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXWAY SOFTWARE and Hongkong Land

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

The idea behind AXWAY SOFTWARE EO and Hongkong Land Holdings 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.