Correlation Between AXichem AB and EEducation Albert

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

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

Diversification Opportunities for AXichem AB and EEducation Albert

-0.21

Correlation Coefficient

AXichem AB  EEducation Albert

Very good diversification

The 3 months correlation between AXichem and EEducation is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding aXichem AB and eEducation Albert AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eEducation Albert and AXichem AB 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 aXichem AB are associated (or correlated) with EEducation Albert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eEducation Albert has no effect on the direction of AXichem AB i.e., AXichem AB and EEducation Albert go up and down completely randomly.

Pair Corralation between AXichem AB and EEducation Albert

Assuming the 90 days trading horizon aXichem AB is expected to generate 3.88 times more return on investment than EEducation Albert. However, AXichem AB is 3.88 times more volatile than eEducation Albert AB. It trades about 0.04 of its potential returns per unit of risk. eEducation Albert AB is currently generating about -0.09 per unit of risk. If you would invest  142.00  in aXichem AB on September 4, 2024 and sell it today you would earn a total of  2.00  from holding aXichem AB or generate 1.41% return on investment over 90 days.

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

aXichem AB  vs.  eEducation Albert AB

aXichem AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in aXichem AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, AXichem AB sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AXichem AB and EEducation Albert

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

The idea behind aXichem AB and eEducation Albert 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.