Correlation Between USWE Sports and Axfood AB

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

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

Diversification Opportunities for USWE Sports and Axfood AB

0.78

Correlation Coefficient

USWE Sports  Axfood AB

Poor diversification

The 3 months correlation between USWE and Axfood is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and USWE Sports 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 USWE Sports AB are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of USWE Sports i.e., USWE Sports and Axfood AB go up and down completely randomly.

Pair Corralation between USWE Sports and Axfood AB

Assuming the 90 days trading horizon USWE Sports AB is expected to generate 3.11 times more return on investment than Axfood AB. However, USWE Sports is 3.11 times more volatile than Axfood AB. It trades about 0.29 of its potential returns per unit of risk. Axfood AB is currently generating about 0.21 per unit of risk. If you would invest  745.00  in USWE Sports AB on April 20, 2025 and sell it today you would earn a total of  605.00  from holding USWE Sports AB or generate 81.21% return on investment over 90 days.

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

USWE Sports AB  vs.  Axfood AB

USWE Sports AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in USWE Sports AB are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

Axfood AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axfood AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Axfood AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with USWE Sports and Axfood AB

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

The idea behind USWE Sports AB and Axfood 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..