Correlation Between BEKA LUX and AXA World

Can any of the company-specific risk be diversified away by investing in both BEKA LUX and AXA World 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 BEKA LUX and AXA World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BEKA LUX SICAV and AXA World Funds, you can compare the effects of market volatilities on BEKA LUX and AXA World 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 BEKA LUX with a short position of AXA World. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEKA LUX and AXA World.

Diversification Opportunities for BEKA LUX and AXA World

0.33

Correlation Coefficient

BEKA LUX  AXA World

Weak diversification

The 3 months correlation between BEKA and AXA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BEKA LUX SICAV and AXA World Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA World Funds and BEKA LUX 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 BEKA LUX SICAV are associated (or correlated) with AXA World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA World Funds has no effect on the direction of BEKA LUX i.e., BEKA LUX and AXA World go up and down completely randomly.

Pair Corralation between BEKA LUX and AXA World

Assuming the 90 days trading horizon BEKA LUX SICAV is expected to under-perform the AXA World. But the fund apears to be less risky and, when comparing its historical volatility, BEKA LUX SICAV is 1.77 times less risky than AXA World. The fund trades about 0.0 of its potential returns per unit of risk. The AXA World Funds is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  19,668  in AXA World Funds on October 12, 2024 and sell it today you would earn a total of  1,023  from holding AXA World Funds or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

BEKA LUX SICAV  vs.  AXA World Funds

BEKA LUX SICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEKA LUX SICAV has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, BEKA LUX is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

AXA World Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA World Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, AXA World is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BEKA LUX and AXA World

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

The idea behind BEKA LUX SICAV and AXA World Funds 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.