Correlation Between AXA SA and VIVA WINE

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

By analyzing existing cross correlation between AXA SA and VIVA WINE GROUP, you can compare the effects of market volatilities on AXA SA and VIVA WINE 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 VIVA WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and VIVA WINE.

Diversification Opportunities for AXA SA and VIVA WINE

0.55

Correlation Coefficient

AXA SA  VIVA WINE

Very weak diversification

The 3 months correlation between AXA and VIVA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and VIVA WINE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIVA WINE GROUP 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 VIVA WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIVA WINE GROUP has no effect on the direction of AXA SA i.e., AXA SA and VIVA WINE go up and down completely randomly.

Pair Corralation between AXA SA and VIVA WINE

Assuming the 90 days trading horizon AXA SA is expected to generate 0.52 times more return on investment than VIVA WINE. However, AXA SA is 1.91 times less risky than VIVA WINE. It trades about 0.1 of its potential returns per unit of risk. VIVA WINE GROUP is currently generating about 0.02 per unit of risk. If you would invest  3,407  in AXA SA on October 9, 2024 and sell it today you would earn a total of  42.00  from holding AXA SA or generate 1.23% return on investment over 90 days.

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

AXA SA  vs.  VIVA WINE GROUP

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AXA SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 VIVA WINE

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

The idea behind AXA SA and VIVA WINE GROUP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.