Correlation Between Addentax Group and GXO Logistics

Can any of the company-specific risk be diversified away by investing in both Addentax Group and GXO Logistics 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 Addentax Group and GXO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Addentax Group Corp and GXO Logistics, you can compare the effects of market volatilities on Addentax Group and GXO Logistics 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 Addentax Group with a short position of GXO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addentax Group and GXO Logistics.

Diversification Opportunities for Addentax Group and GXO Logistics

-0.6

Correlation Coefficient

Addentax Group  GXO Logistics

Excellent diversification

The 3 months correlation between Addentax and GXO is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Addentax Group Corp and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and Addentax Group 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 Addentax Group Corp are associated (or correlated) with GXO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GXO Logistics has no effect on the direction of Addentax Group i.e., Addentax Group and GXO Logistics go up and down completely randomly.

Pair Corralation between Addentax Group and GXO Logistics

Given the investment horizon of 90 days Addentax Group Corp is expected to generate 2.32 times more return on investment than GXO Logistics. However, Addentax Group is 2.32 times more volatile than GXO Logistics. It trades about 0.07 of its potential returns per unit of risk. GXO Logistics is currently generating about -0.02 per unit of risk. If you would invest  69.00  in Addentax Group Corp on December 27, 2024 and sell it today you would earn a total of  13.20  from holding Addentax Group Corp or generate 19.13% return on investment over 90 days.

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

Addentax Group Corp  vs.  GXO Logistics

Addentax Group Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Addentax Group Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Addentax Group reported solid returns over the last few months and may actually be approaching a breakup point.

GXO Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days GXO Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GXO Logistics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Addentax Group and GXO Logistics

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

The idea behind Addentax Group Corp and GXO Logistics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.