Correlation Between Axalta Coating and Suntory Beverage

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

Diversification Opportunities for Axalta Coating and Suntory Beverage

-0.75

Correlation Coefficient

Axalta Coating  Suntory Beverage

Pay attention - limited upside

The 3 months correlation between Axalta and Suntory is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of Axalta Coating i.e., Axalta Coating and Suntory Beverage go up and down completely randomly.

Pair Corralation between Axalta Coating and Suntory Beverage

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 1.25 times more return on investment than Suntory Beverage. However, Axalta Coating is 1.25 times more volatile than Suntory Beverage Food. It trades about 0.12 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about -0.09 per unit of risk. If you would invest  3,574  in Axalta Coating Systems on September 2, 2024 and sell it today you would earn a total of  472.00  from holding Axalta Coating Systems or generate 13.21% return on investment over 90 days.

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

Axalta Coating Systems  vs.  Suntory Beverage Food

Axalta Coating Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Axalta Coating sustained solid returns over the last few months and may actually be approaching a breakup point.

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Axalta Coating and Suntory Beverage

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

The idea behind Axalta Coating Systems and Suntory Beverage Food 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.