Correlation Between Suntory Beverage and American Axle

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

By analyzing existing cross correlation between Suntory Beverage Food and American Axle Manufacturing, you can compare the effects of market volatilities on Suntory Beverage and American Axle 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 Suntory Beverage with a short position of American Axle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and American Axle.

Diversification Opportunities for Suntory Beverage and American Axle

-0.64

Correlation Coefficient

Suntory Beverage  American Axle

Excellent diversification

The 3 months correlation between Suntory and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and American Axle Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Axle Manufa and Suntory Beverage 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 Suntory Beverage Food are associated (or correlated) with American Axle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Axle Manufa has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and American Axle go up and down completely randomly.

Pair Corralation between Suntory Beverage and American Axle

Assuming the 90 days horizon Suntory Beverage Food is expected to generate 0.36 times more return on investment than American Axle. However, Suntory Beverage Food is 2.77 times less risky than American Axle. It trades about 0.05 of its potential returns per unit of risk. American Axle Manufacturing is currently generating about -0.14 per unit of risk. If you would invest  1,601  in Suntory Beverage Food on December 30, 2024 and sell it today you would earn a total of  55.00  from holding Suntory Beverage Food or generate 3.44% return on investment over 90 days.

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

Suntory Beverage Food  vs.  American Axle Manufacturing

Suntory Beverage Food

Risk-Adjusted Performance

Insignificant

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

American Axle Manufa

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Axle Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Suntory Beverage and American Axle

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

The idea behind Suntory Beverage Food and American Axle Manufacturing 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 CEOs Directory module to screen CEOs from public companies around the world.