Correlation Between Axa SA and Fosun International
Can any of the company-specific risk be diversified away by investing in both Axa SA and Fosun International 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 Axa SA and Fosun International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axa SA ADR and Fosun International Ltd, you can compare the effects of market volatilities on Axa SA and Fosun International 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 Axa SA with a short position of Fosun International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axa SA and Fosun International.
Diversification Opportunities for Axa SA and Fosun International
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axa and Fosun is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Axa SA ADR and Fosun International Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fosun International and Axa SA 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 Axa SA ADR are associated (or correlated) with Fosun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fosun International has no effect on the direction of Axa SA i.e., Axa SA and Fosun International go up and down completely randomly.
Pair Corralation between Axa SA and Fosun International
Assuming the 90 days horizon Axa SA ADR is expected to generate 1.13 times more return on investment than Fosun International. However, Axa SA is 1.13 times more volatile than Fosun International Ltd. It trades about 0.18 of its potential returns per unit of risk. Fosun International Ltd is currently generating about 0.0 per unit of risk. If you would invest 2,887 in Axa SA ADR on January 19, 2024 and sell it today you would earn a total of 473.00 from holding Axa SA ADR or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 67.48% |
| Values | Daily Returns |
Axa SA ADR vs. Fosun International Ltd
Performance |
| Timeline |
| Axa SA ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Fosun International |
Axa SA and Fosun International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axa SA and Fosun International
The main advantage of trading using opposite Axa SA and Fosun International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axa SA position performs unexpectedly, Fosun International 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 Fosun International will offset losses from the drop in Fosun International's long position.The idea behind Axa SA ADR and Fosun International Ltd 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.| Fosun International vs. Willamette Valley Vineyards | Fosun International vs. Udemy Inc | Fosun International vs. Daily Journal Corp | Fosun International vs. Pearson PLC ADR |
Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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