Correlation Between GXO Logistics and Addentax Group

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

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

Diversification Opportunities for GXO Logistics and Addentax Group

-0.6

Correlation Coefficient

GXO Logistics  Addentax Group

Excellent diversification

The 3 months correlation between GXO and Addentax is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GXO Logistics and Addentax Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addentax Group Corp and GXO Logistics 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 GXO Logistics are associated (or correlated) with Addentax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addentax Group Corp has no effect on the direction of GXO Logistics i.e., GXO Logistics and Addentax Group go up and down completely randomly.

Pair Corralation between GXO Logistics and Addentax Group

Considering the 90-day investment horizon GXO Logistics is expected to under-perform the Addentax Group. But the stock apears to be less risky and, when comparing its historical volatility, GXO Logistics is 2.32 times less risky than Addentax Group. The stock trades about -0.02 of its potential returns per unit of risk. The Addentax Group Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Addentax Group Corp on December 27, 2024 and sell it today you would earn a total of  13.20  from holding Addentax Group Corp or generate 19.13% return on investment over 90 days.

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

GXO Logistics  vs.  Addentax Group Corp

GXO Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days GXO Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GXO Logistics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Addentax Group Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Addentax Group Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Addentax Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GXO Logistics and Addentax Group

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

The idea behind GXO Logistics and Addentax Group Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.