Correlation Between XXL ASA and Axactor SE

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

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

Diversification Opportunities for XXL ASA and Axactor SE

0.91

Correlation Coefficient

XXL ASA  Axactor SE

Almost no diversification

The 3 months correlation between XXL and Axactor is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding XXL ASA and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE and XXL ASA 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 XXL ASA are associated (or correlated) with Axactor SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axactor SE has no effect on the direction of XXL ASA i.e., XXL ASA and Axactor SE go up and down completely randomly.

Pair Corralation between XXL ASA and Axactor SE

Assuming the 90 days trading horizon XXL ASA is expected to generate 4.41 times more return on investment than Axactor SE. However, XXL ASA is 4.41 times more volatile than Axactor SE. It trades about 0.11 of its potential returns per unit of risk. Axactor SE is currently generating about 0.13 per unit of risk. If you would invest  1,130  in XXL ASA on September 18, 2024 and sell it today you would earn a total of  191.00  from holding XXL ASA or generate 16.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

XXL ASA  vs.  Axactor SE

XXL ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XXL ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Axactor SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axactor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with XXL ASA and Axactor SE

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

The idea behind XXL ASA and Axactor SE 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.