Correlation Between Sofina Socit and Axway Software

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

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

Diversification Opportunities for Sofina Socit and Axway Software

-0.93

Correlation Coefficient

Sofina Socit  Axway Software

Pay attention - limited upside

The 3 months correlation between Sofina and Axway is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Axway Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software and Sofina Socit 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 Sofina Socit Anonyme 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 Sofina Socit i.e., Sofina Socit and Axway Software go up and down completely randomly.

Pair Corralation between Sofina Socit and Axway Software

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to under-perform the Axway Software. But the stock apears to be less risky and, when comparing its historical volatility, Sofina Socit Anonyme is 1.05 times less risky than Axway Software. The stock trades about -0.24 of its potential returns per unit of risk. The Axway Software is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,280  in Axway Software on September 13, 2024 and sell it today you would earn a total of  470.00  from holding Axway Software or generate 20.61% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Axway Software

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme 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 technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Axway Software

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software are ranked lower than 21 (%) 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.

Pair Trading with Sofina Socit and Axway Software

The main advantage of trading using opposite Sofina Socit and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofina Socit 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 Sofina Socit Anonyme 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.