Correlation Between EEducation Albert and AXichem AB

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

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

Diversification Opportunities for EEducation Albert and AXichem AB

-0.25

Correlation Coefficient

EEducation Albert  AXichem AB

Very good diversification

The 3 months correlation between EEducation and AXichem is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding eEducation Albert AB and aXichem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aXichem AB and EEducation Albert 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 eEducation Albert 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 EEducation Albert i.e., EEducation Albert and AXichem AB go up and down completely randomly.

Pair Corralation between EEducation Albert and AXichem AB

Assuming the 90 days trading horizon eEducation Albert AB is expected to under-perform the AXichem AB. But the stock apears to be less risky and, when comparing its historical volatility, eEducation Albert AB is 3.84 times less risky than AXichem AB. The stock trades about -0.13 of its potential returns per unit of risk. The aXichem AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  133.00  in aXichem AB on September 12, 2024 and sell it today you would lose (11.00) from holding aXichem AB or give up 8.27% of portfolio value over 90 days.

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

eEducation Albert AB  vs.  aXichem AB

eEducation Albert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eEducation Albert AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

aXichem AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in aXichem AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, AXichem AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EEducation Albert and AXichem AB

The main advantage of trading using opposite EEducation Albert and AXichem AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EEducation Albert 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 eEducation Albert 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.