Correlation Between Axalta Coating and STOAU

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and STOAU 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 STOAU 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 STOAU 3649 29 APR 31, you can compare the effects of market volatilities on Axalta Coating and STOAU 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 STOAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and STOAU.

Diversification Opportunities for Axalta Coating and STOAU

-0.53

Correlation Coefficient

Axalta Coating  STOAU

Excellent diversification

The 3 months correlation between Axalta and STOAU is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and STOAU 3649 29 APR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STOAU 3649 29 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 STOAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STOAU 3649 29 has no effect on the direction of Axalta Coating i.e., Axalta Coating and STOAU go up and down completely randomly.

Pair Corralation between Axalta Coating and STOAU

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 1.16 times more return on investment than STOAU. However, Axalta Coating is 1.16 times more volatile than STOAU 3649 29 APR 31. It trades about 0.03 of its potential returns per unit of risk. STOAU 3649 29 APR 31 is currently generating about -0.19 per unit of risk. If you would invest  3,558  in Axalta Coating Systems on October 24, 2024 and sell it today you would earn a total of  96.00  from holding Axalta Coating Systems or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	51.67%
Values	Daily Returns

Axalta Coating Systems  vs.  STOAU 3649 29 APR 31

Axalta Coating Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

STOAU 3649 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STOAU 3649 29 APR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for STOAU 3649 29 APR 31 investors.

Pair Trading with Axalta Coating and STOAU

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

The idea behind Axalta Coating Systems and STOAU 3649 29 APR 31 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 Global Correlations module to find global opportunities by holding instruments from different markets.