Correlation Between Kerlink SAS and Axway Software

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

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

Diversification Opportunities for Kerlink SAS and Axway Software

0.37

Correlation Coefficient

Kerlink SAS  Axway Software

Weak diversification

The 3 months correlation between Kerlink and Axway is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kerlink SAS and Axway Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software and Kerlink SAS 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 Kerlink SAS 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 has no effect on the direction of Kerlink SAS i.e., Kerlink SAS and Axway Software go up and down completely randomly.

Pair Corralation between Kerlink SAS and Axway Software

Assuming the 90 days trading horizon Kerlink SAS is expected to generate 2.73 times less return on investment than Axway Software. In addition to that, Kerlink SAS is 4.15 times more volatile than Axway Software. It trades about 0.02 of its total potential returns per unit of risk. Axway Software is currently generating about 0.25 per unit of volatility. If you would invest  2,390  in Axway Software on October 1, 2024 and sell it today you would earn a total of  360.00  from holding Axway Software or generate 15.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.13%
Values	Daily Returns

Kerlink SAS  vs.  Axway Software

Kerlink SAS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kerlink SAS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kerlink SAS is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Axway Software

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Axway Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Axway Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kerlink SAS and Axway Software

The main advantage of trading using opposite Kerlink SAS and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerlink SAS 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 Kerlink SAS and Axway Software 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.