Correlation Between AXAMANSARD INSURANCE and ABC TRANSPORT

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

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

Diversification Opportunities for AXAMANSARD INSURANCE and ABC TRANSPORT

-0.2

Correlation Coefficient

AXAMANSARD INSURANCE  ABC TRANSPORT

Good diversification

The 3 months correlation between AXAMANSARD and ABC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding AXAMANSARD INSURANCE PLC and ABC TRANSPORT PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC TRANSPORT PLC and AXAMANSARD INSURANCE 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 AXAMANSARD INSURANCE PLC are associated (or correlated) with ABC TRANSPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC TRANSPORT PLC has no effect on the direction of AXAMANSARD INSURANCE i.e., AXAMANSARD INSURANCE and ABC TRANSPORT go up and down completely randomly.

Pair Corralation between AXAMANSARD INSURANCE and ABC TRANSPORT

Assuming the 90 days trading horizon AXAMANSARD INSURANCE is expected to generate 1.33 times less return on investment than ABC TRANSPORT. But when comparing it to its historical volatility, AXAMANSARD INSURANCE PLC is 1.31 times less risky than ABC TRANSPORT. It trades about 0.07 of its potential returns per unit of risk. ABC TRANSPORT PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  123.00  in ABC TRANSPORT PLC on December 27, 2024 and sell it today you would earn a total of  15.00  from holding ABC TRANSPORT PLC or generate 12.2% return on investment over 90 days.

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

AXAMANSARD INSURANCE PLC  vs.  ABC TRANSPORT PLC

AXAMANSARD INSURANCE PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AXAMANSARD INSURANCE PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, AXAMANSARD INSURANCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ABC TRANSPORT PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ABC TRANSPORT PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ABC TRANSPORT displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXAMANSARD INSURANCE and ABC TRANSPORT

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

The idea behind AXAMANSARD INSURANCE PLC and ABC TRANSPORT PLC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.