Correlation Between Axa SA and Ageas SA/NV

Can any of the company-specific risk be diversified away by investing in both Axa SA and Ageas SA/NV 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 Ageas SA/NV 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 ageas SANV, you can compare the effects of market volatilities on Axa SA and Ageas SA/NV 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 Ageas SA/NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axa SA and Ageas SA/NV.

Diversification Opportunities for Axa SA and Ageas SA/NV

-0.57

Correlation Coefficient

Axa SA  Ageas SA/NV

Excellent diversification

The 3 months correlation between Axa and Ageas is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Axa SA ADR and ageas SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ageas SA/NV 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 Ageas SA/NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ageas SA/NV has no effect on the direction of Axa SA i.e., Axa SA and Ageas SA/NV go up and down completely randomly.

Pair Corralation between Axa SA and Ageas SA/NV

Assuming the 90 days horizon Axa SA is expected to generate 1.82 times less return on investment than Ageas SA/NV. But when comparing it to its historical volatility, Axa SA ADR is 2.18 times less risky than Ageas SA/NV. It trades about 0.06 of its potential returns per unit of risk. ageas SANV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,912  in ageas SANV on August 31, 2024 and sell it today you would earn a total of  1,353  from holding ageas SANV or generate 34.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	51.33%
Values	Daily Returns

Axa SA ADR  vs.  ageas SANV

Axa SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axa SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Axa SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ageas SA/NV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ageas SANV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Ageas SA/NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axa SA and Ageas SA/NV

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

The idea behind Axa SA ADR and ageas SANV 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.