Correlation Between AXA SA and Savencia

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

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

Diversification Opportunities for AXA SA and Savencia

-0.09

Correlation Coefficient

AXA SA  Savencia

Good diversification

The 3 months correlation between AXA and Savencia is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Savencia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savencia SA and AXA SA 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 AXA SA are associated (or correlated) with Savencia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savencia SA has no effect on the direction of AXA SA i.e., AXA SA and Savencia go up and down completely randomly.

Pair Corralation between AXA SA and Savencia

Assuming the 90 days horizon AXA SA is expected to generate 0.9 times more return on investment than Savencia. However, AXA SA is 1.12 times less risky than Savencia. It trades about 0.07 of its potential returns per unit of risk. Savencia SA is currently generating about 0.04 per unit of risk. If you would invest  3,126  in AXA SA on September 29, 2024 and sell it today you would earn a total of  282.00  from holding AXA SA or generate 9.02% return on investment over 90 days.

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

AXA SA  vs.  Savencia SA

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 somewhat strong basic indicators, AXA SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Savencia SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Savencia SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Savencia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AXA SA and Savencia

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

The idea behind AXA SA and Savencia 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..