Correlation Between AXA SA and Peijia Medical

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

By analyzing existing cross correlation between AXA SA and Peijia Medical Limited, you can compare the effects of market volatilities on AXA SA and Peijia Medical 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 AXA SA with a short position of Peijia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Peijia Medical.

Diversification Opportunities for AXA SA and Peijia Medical

0.27

Correlation Coefficient

AXA SA  Peijia Medical

Modest diversification

The 3 months correlation between AXA and Peijia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Peijia Medical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peijia Medical and AXA SA 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 AXA SA are associated (or correlated) with Peijia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peijia Medical has no effect on the direction of AXA SA i.e., AXA SA and Peijia Medical go up and down completely randomly.

Pair Corralation between AXA SA and Peijia Medical

Assuming the 90 days trading horizon AXA SA is expected to generate 0.31 times more return on investment than Peijia Medical. However, AXA SA is 3.18 times less risky than Peijia Medical. It trades about 0.06 of its potential returns per unit of risk. Peijia Medical Limited is currently generating about -0.03 per unit of risk. If you would invest  2,538  in AXA SA on October 23, 2024 and sell it today you would earn a total of  1,003  from holding AXA SA or generate 39.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

AXA SA  vs.  Peijia Medical Limited

AXA SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AXA SA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Peijia Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peijia Medical Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AXA SA and Peijia Medical

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

The idea behind AXA SA and Peijia Medical Limited 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.