Correlation Between IA Financial and AXA SA

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

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

Diversification Opportunities for IA Financial and AXA SA

-0.57

Correlation Coefficient

IA Financial  AXA SA

Excellent diversification

The 3 months correlation between IAFNF and AXA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and IA Financial 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 iA Financial 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 IA Financial i.e., IA Financial and AXA SA go up and down completely randomly.

Pair Corralation between IA Financial and AXA SA

Assuming the 90 days horizon iA Financial is expected to under-perform the AXA SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, iA Financial is 1.04 times less risky than AXA SA. The pink sheet trades about -0.02 of its potential returns per unit of risk. The AXA SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,508  in AXA SA on December 28, 2024 and sell it today you would earn a total of  835.00  from holding AXA SA or generate 23.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

iA Financial  vs.  AXA SA

iA Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days iA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IA Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AXA SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, AXA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IA Financial and AXA SA

The main advantage of trading using opposite IA Financial and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial 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 iA Financial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.