Correlation Between Aluminumof China and AXA SA
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and AXA 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 Aluminumof China and AXA SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and AXA SA, you can compare the effects of market volatilities on Aluminumof China and AXA 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 Aluminumof China with a short position of AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and AXA SA.
Diversification Opportunities for Aluminumof China and AXA SA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aluminumof and AXA is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and Aluminumof China 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 Aluminum of are associated (or correlated) with AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Aluminumof China i.e., Aluminumof China and AXA SA go up and down completely randomly.
Pair Corralation between Aluminumof China and AXA SA
Assuming the 90 days horizon Aluminum of is expected to generate 2.76 times more return on investment than AXA SA. However, Aluminumof China is 2.76 times more volatile than AXA SA. It trades about 0.06 of its potential returns per unit of risk. AXA SA is currently generating about 0.05 per unit of risk. If you would invest 27.00 in Aluminum of on September 3, 2024 and sell it today you would earn a total of 28.00 from holding Aluminum of or generate 103.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. AXA SA
Performance |
| Timeline |
| Aluminumof China |
| AXA SA |
Aluminumof China and AXA SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and AXA SA
The main advantage of trading using opposite Aluminumof China and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, AXA 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 AXA SA will offset losses from the drop in AXA SA's long position.| Aluminumof China vs. TITANIUM TRANSPORTGROUP | Aluminumof China vs. TSOGO SUN GAMING | Aluminumof China vs. Media and Games | Aluminumof China vs. UNIVMUSIC GRPADR050 |
| AXA SA vs. Spirent Communications plc | AXA SA vs. Entravision Communications | AXA SA vs. Alfa Financial Software | AXA SA vs. Eidesvik Offshore ASA |
Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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