Correlation Between Axalta Coating and Aeries Technology
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Aeries Technology 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 Axalta Coating and Aeries Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Aeries Technology, you can compare the effects of market volatilities on Axalta Coating and Aeries Technology 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 Axalta Coating with a short position of Aeries Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Aeries Technology.
Diversification Opportunities for Axalta Coating and Aeries Technology
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Axalta and Aeries is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Aeries Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeries Technology and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Aeries Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeries Technology has no effect on the direction of Axalta Coating i.e., Axalta Coating and Aeries Technology go up and down completely randomly.
Pair Corralation between Axalta Coating and Aeries Technology
Given the investment horizon of 90 days Axalta Coating is expected to generate 27.96 times less return on investment than Aeries Technology. But when comparing it to its historical volatility, Axalta Coating Systems is 16.05 times less risky than Aeries Technology. It trades about 0.07 of its potential returns per unit of risk. Aeries Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2.60 in Aeries Technology on September 1, 2024 and sell it today you would earn a total of 0.91 from holding Aeries Technology or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 34.13% |
| Values | Daily Returns |
Axalta Coating Systems vs. Aeries Technology
Performance |
| Timeline |
| Axalta Coating Systems |
| Aeries Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Axalta Coating and Aeries Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Aeries Technology
The main advantage of trading using opposite Axalta Coating and Aeries Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Aeries Technology 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 Aeries Technology will offset losses from the drop in Aeries Technology's long position.| Axalta Coating vs. Linde plc Ordinary | Axalta Coating vs. Air Products and | Axalta Coating vs. Aquagold International | Axalta Coating vs. Thrivent High Yield |
| Aeries Technology vs. CRA International | Aeries Technology vs. Huron Consulting Group | Aeries Technology vs. Franklin Covey | Aeries Technology vs. ICF International |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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