Correlation Between Axalta Coating and Aterian

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Aterian 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 Aterian 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 Aterian, you can compare the effects of market volatilities on Axalta Coating and Aterian 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 Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Aterian.

Diversification Opportunities for Axalta Coating and Aterian

0.26

Correlation Coefficient

Axalta Coating  Aterian

Modest diversification

The 3 months correlation between Axalta and Aterian is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian 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 Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Axalta Coating i.e., Axalta Coating and Aterian go up and down completely randomly.

Pair Corralation between Axalta Coating and Aterian

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.54 times more return on investment than Aterian. However, Axalta Coating Systems is 1.84 times less risky than Aterian. It trades about -0.06 of its potential returns per unit of risk. Aterian is currently generating about -0.1 per unit of risk. If you would invest  3,677  in Axalta Coating Systems on October 15, 2024 and sell it today you would lose (254.00) from holding Axalta Coating Systems or give up 6.91% of portfolio value over 90 days.

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

Axalta Coating Systems  vs.  Aterian

Axalta Coating Systems

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Axalta Coating and Aterian

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

The idea behind Axalta Coating Systems and Aterian 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.