Correlation Between China Resources and AXA SA

Can any of the company-specific risk be diversified away by investing in both China Resources and AXA SA 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 China Resources and AXA SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Resources Beer and AXA SA, you can compare the effects of market volatilities on China Resources and AXA SA 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 China Resources with a short position of AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and AXA SA.

Diversification Opportunities for China Resources and AXA SA

0.0

Correlation Coefficient

China Resources  AXA SA

Pay attention - limited upside

The 3 months correlation between China and AXA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and China Resources 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 China Resources Beer are associated (or correlated) with AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of China Resources i.e., China Resources and AXA SA go up and down completely randomly.

Pair Corralation between China Resources and AXA SA

If you would invest (100.00) in AXA SA on October 9, 2024 and sell it today you would earn a total of  100.00  from holding AXA SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

China Resources Beer  vs.  AXA SA

China Resources Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Resources Beer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AXA SA

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with China Resources and AXA SA

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

The idea behind China Resources Beer and AXA SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.