Correlation Between Axalta Coating and Centessa Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Centessa Pharmaceuticals 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 Axalta Coating and Centessa Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axalta Coating Systems and Centessa Pharmaceuticals PLC, you can compare the effects of market volatilities on Axalta Coating and Centessa Pharmaceuticals 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 Axalta Coating with a short position of Centessa Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Centessa Pharmaceuticals.

Diversification Opportunities for Axalta Coating and Centessa Pharmaceuticals

0.67

Correlation Coefficient

Axalta Coating  Centessa Pharmaceuticals

Poor diversification

The 3 months correlation between Axalta and Centessa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Centessa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centessa Pharmaceuticals has no effect on the direction of Axalta Coating i.e., Axalta Coating and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Axalta Coating and Centessa Pharmaceuticals

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.52 times more return on investment than Centessa Pharmaceuticals. However, Axalta Coating Systems is 1.91 times less risky than Centessa Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Centessa Pharmaceuticals PLC is currently generating about 0.02 per unit of risk. If you would invest  3,516  in Axalta Coating Systems on September 15, 2024 and sell it today you would earn a total of  307.00  from holding Axalta Coating Systems or generate 8.73% return on investment over 90 days.

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

Axalta Coating Systems  vs.  Centessa Pharmaceuticals PLC

Axalta Coating Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Axalta Coating may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Centessa Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Centessa Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Axalta Coating and Centessa Pharmaceuticals

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

The idea behind Axalta Coating Systems and Centessa Pharmaceuticals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.