Correlation Between Alzinova and AXichem AB

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

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

Diversification Opportunities for Alzinova and AXichem AB

-0.1

Correlation Coefficient

Alzinova  AXichem AB

Good diversification

The 3 months correlation between Alzinova and AXichem is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alzinova AB and aXichem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aXichem AB and Alzinova 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 Alzinova 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 Alzinova i.e., Alzinova and AXichem AB go up and down completely randomly.

Pair Corralation between Alzinova and AXichem AB

Assuming the 90 days trading horizon Alzinova AB is expected to under-perform the AXichem AB. But the stock apears to be less risky and, when comparing its historical volatility, Alzinova AB is 2.46 times less risky than AXichem AB. The stock trades about -0.03 of its potential returns per unit of risk. The aXichem AB is currently generating about 0.02 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 (7.00) from holding aXichem AB or give up 5.26% of portfolio value over 90 days.

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

Alzinova AB  vs.  aXichem AB

Alzinova AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alzinova AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alzinova is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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 Alzinova and AXichem AB

The main advantage of trading using opposite Alzinova and AXichem AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alzinova 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 Alzinova 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.