Correlation Between Axway Software and Reworld Media

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

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

Diversification Opportunities for Axway Software and Reworld Media

-0.83

Correlation Coefficient

Axway Software  Reworld Media

Pay attention - limited upside

The 3 months correlation between Axway and Reworld is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software and Reworld Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reworld Media 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 are associated (or correlated) with Reworld Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reworld Media has no effect on the direction of Axway Software i.e., Axway Software and Reworld Media go up and down completely randomly.

Pair Corralation between Axway Software and Reworld Media

Assuming the 90 days trading horizon Axway Software is expected to generate 0.36 times more return on investment than Reworld Media. However, Axway Software is 2.81 times less risky than Reworld Media. It trades about 0.24 of its potential returns per unit of risk. Reworld Media is currently generating about -0.14 per unit of risk. If you would invest  2,300  in Axway Software on August 31, 2024 and sell it today you would earn a total of  440.00  from holding Axway Software or generate 19.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Axway Software  vs.  Reworld Media

Axway Software

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Axway Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Reworld Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reworld Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Axway Software and Reworld Media

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

The idea behind Axway Software and Reworld Media 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.