Correlation Between Axway Software and ACTEOS SA

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

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

Diversification Opportunities for Axway Software and ACTEOS SA

-0.45

Correlation Coefficient

Axway Software  ACTEOS SA

Very good diversification

The 3 months correlation between Axway and ACTEOS is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software and ACTEOS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACTEOS SA 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 ACTEOS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACTEOS SA has no effect on the direction of Axway Software i.e., Axway Software and ACTEOS SA go up and down completely randomly.

Pair Corralation between Axway Software and ACTEOS SA

Assuming the 90 days trading horizon Axway Software is expected to generate 0.36 times more return on investment than ACTEOS SA. However, Axway Software is 2.76 times less risky than ACTEOS SA. It trades about 0.25 of its potential returns per unit of risk. ACTEOS SA is currently generating about -0.14 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	84.13%
Values	Daily Returns

Axway Software  vs.  ACTEOS SA

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.

ACTEOS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACTEOS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators 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.

Pair Trading with Axway Software and ACTEOS SA

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

The idea behind Axway Software and ACTEOS SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.