Correlation Between AXA SA and Geely Automobile

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Can any of the company-specific risk be diversified away by investing in both AXA SA and Geely Automobile 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 Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA SA and Geely Automobile Holdings, you can compare the effects of market volatilities on AXA SA and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Geely Automobile.

Diversification Opportunities for AXA SA and Geely Automobile

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between AXA and Geely is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of AXA SA i.e., AXA SA and Geely Automobile go up and down completely randomly.

Pair Corralation between AXA SA and Geely Automobile

Assuming the 90 days trading horizon AXA SA is expected to generate 1.14 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, AXA SA is 1.54 times less risky than Geely Automobile. It trades about 0.03 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  176.00  in Geely Automobile Holdings on October 6, 2024 and sell it today you would earn a total of  1.00  from holding Geely Automobile Holdings or generate 0.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy97.5%
ValuesDaily Returns

AXA SA  vs.  Geely Automobile Holdings

 Performance 
       Timeline  
AXA SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AXA SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Geely Automobile Holdings 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Geely Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

AXA SA and Geely Automobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AXA SA and Geely Automobile

The main advantage of trading using opposite AXA SA and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.
The idea behind AXA SA and Geely Automobile Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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