Correlation Between Axalta Coating and ReAlpha Tech

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and ReAlpha Tech 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 Axalta Coating and ReAlpha Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axalta Coating Systems and reAlpha Tech Corp, you can compare the effects of market volatilities on Axalta Coating and ReAlpha Tech 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 Axalta Coating with a short position of ReAlpha Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and ReAlpha Tech.

Diversification Opportunities for Axalta Coating and ReAlpha Tech

0.05

Correlation Coefficient

Axalta Coating  ReAlpha Tech

Significant diversification

The 3 months correlation between Axalta and ReAlpha is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and reAlpha Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on reAlpha Tech Corp and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with ReAlpha Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of reAlpha Tech Corp has no effect on the direction of Axalta Coating i.e., Axalta Coating and ReAlpha Tech go up and down completely randomly.

Pair Corralation between Axalta Coating and ReAlpha Tech

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.25 times more return on investment than ReAlpha Tech. However, Axalta Coating Systems is 3.98 times less risky than ReAlpha Tech. It trades about 0.0 of its potential returns per unit of risk. reAlpha Tech Corp is currently generating about -0.17 per unit of risk. If you would invest  3,463  in Axalta Coating Systems on December 26, 2024 and sell it today you would lose (45.00) from holding Axalta Coating Systems or give up 1.3% of portfolio value over 90 days.

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

Axalta Coating Systems  vs.  reAlpha Tech Corp

Axalta Coating Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axalta Coating Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Axalta Coating is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

reAlpha Tech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days reAlpha Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Axalta Coating and ReAlpha Tech

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

The idea behind Axalta Coating Systems and reAlpha Tech Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.