Correlation Between GrafTech International and AXA SA

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

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

Diversification Opportunities for GrafTech International and AXA SA

-0.68

Correlation Coefficient

GrafTech International  AXA SA

Excellent diversification

The 3 months correlation between GrafTech and AXA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and GrafTech International 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 GrafTech International 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 GrafTech International i.e., GrafTech International and AXA SA go up and down completely randomly.

Pair Corralation between GrafTech International and AXA SA

Assuming the 90 days horizon GrafTech International is expected to under-perform the AXA SA. In addition to that, GrafTech International is 3.92 times more volatile than AXA SA. It trades about -0.16 of its total potential returns per unit of risk. AXA SA is currently generating about -0.05 per unit of volatility. If you would invest  3,409  in AXA SA on September 23, 2024 and sell it today you would lose (58.00) from holding AXA SA or give up 1.7% of portfolio value over 90 days.

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

GrafTech International  vs.  AXA SA

GrafTech International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GrafTech International and AXA SA

The main advantage of trading using opposite GrafTech International and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GrafTech International 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 GrafTech International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.