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11/06/2026

Using Beta to Find Supply Chain Correlations

6 min read

Using Beta to Find Supply Chain Correlations

In today’s interconnected global economy, companies don’t operate in isolation. A disruption at one supplier can ripple through entire industries, while strong performance from a key customer can lift multiple companies simultaneously. But how can investors and analysts systematically uncover these hidden relationships? The answer lies in combining beta analysis with supply chain data — and the Axion SDK makes this powerful combination accessible to everyone.

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Understanding Beta and Supply Chain Relationships

What is Beta?

Beta (β) measures a stock’s volatility relative to the overall market. A beta of 1 means the stock moves with the market, while a beta greater than 1 indicates higher volatility, and less than 1 indicates lower volatility. But beta isn’t just about volatility — it can reveal how closely two companies’ stock prices move together.

The Supply Chain Connection

Companies within the same supply chain often share:

  • Common economic exposures
  • Shared customer/supplier dependencies
  • Similar industry cycles
  • Correlated earnings patterns

By calculating beta between companies in a supply chain, we can:

  1. Identify which relationships are strongest
  2. Predict how disruptions might propagate
  3. Find diversification opportunities
  4. Spot leading indicators for company performance

Getting Started with Axion SDK

First, let’s set up our environment:

from axion import Axion, visualize
import pandas as pd
# Initialize the Axion client
client = Axion(api_key="your_api_key_here")

Step-by-Step Analysis: Finding Supply Chain Correlations

  1. Map the Supply Chain

Let’s start by examining Apple’s (AAPL) supply chain:

# Get Apple's suppliers
suppliers = client.supply_chain.suppliers("AAPL")
suppliers_df = pd.DataFrame(suppliers)
# Get Apple's customers (if available)
customers = client.supply_chain.customers("AAPL")
customers_df = pd.DataFrame(customers)
# Get industry peers
peers = client.supply_chain.peers("AAPL")
peers_df = pd.DataFrame(peers)
# Display the supply chain network
print("Apple's Key Supply Chain Relationships:")
print(f"Suppliers: {len(suppliers_df)} companies")
print(f"Customers: {len(customers_df)} companies")
print(f"Peers: {len(peers_df)} companies")
  1. Collect Historical Price Data

Now, let’s gather price data for Apple and its key suppliers:

def get_price_history(ticker, days_back=365):
    """Fetch historical price data for a given ticker"""
    prices = client.stocks.prices(
        ticker=ticker,
        from_date=pd.Timestamp.now() - pd.Timedelta(days=days_back),
        to_date=pd.Timestamp.now(),
        frame='daily'
    )
    return pd.DataFrame(prices)
# Get Apple's price history
aapl_prices = get_price_history("AAPL")
# Get price history for key suppliers (example: TSMC, QCOM, AVGO)
supplier_tickers = ["TSM", "QCOM", "AVGO", "SWKS", "CRUS"]
supplier_prices = {}
for ticker in supplier_tickers:
    try:
        supplier_prices[ticker] = get_price_history(ticker)
        print(f"Retrieved data for {ticker}")
    except Exception as e:
        print(f"Could not retrieve {ticker}: {e}")
  1. Calculate Beta Relationships

Using Axion’s built-in beta function, we can calculate how each supplier's stock moves relative to Apple:

# Combine all price data into a single DataFrame
combined_data = aapl_prices[['time', 'close']].rename(columns={'close': 'AAPL'})
for ticker, prices in supplier_prices.items():
    combined_data = pd.merge(
        combined_data,
        prices[['time', 'close']].rename(columns={'close': ticker}),
        on='time',
        how='inner'
    )
# Calculate beta for each supplier relative to Apple
beta_results = []
for supplier in supplier_tickers:
    if supplier in combined_data.columns:
        # Use the beta function from Axion SDK
        beta_value = beta(combined_data, 'AAPL', supplier)
        beta_results.append({
            'Supplier': supplier,
            'Beta_vs_AAPL': beta_value,
            'Relationship': 'Strong' if abs(beta_value) > 0.7 else 'Moderate' if abs(beta_value) > 0.3 else 'Weak'
        })
beta_df = pd.DataFrame(beta_results)
print("\nBeta Analysis Results:")
print(beta_df.sort_values('Beta_vs_AAPL', ascending=False))
  1. Advanced Correlation Analysis

Let’s take this a step further with multivariate analysis:

# Create correlation matrix
correlation_matrix = combined_data.drop('time', axis=1).corr()
# Visualize the correlation matrix
visualize.cov(correlation_matrix)
# Perform linear regression to predict Apple's price from supplier prices
from axion import multiLinearRegression
# Prepare data for multivariate analysis
analysis_df = combined_data.copy()
analysis_df['time'] = pd.to_datetime(analysis_df['time'])
# Run multivariate regression
prediction = multiLinearRegression(
    df=analysis_df,
    x='time',
    target='AAPL',
    features=supplier_tickers,
    n_preds=30,
    scale='D'
)
print("\nMultivariate Analysis Results:")
print(f"Predicted Apple price movements based on {len(supplier_tickers)} suppliers")
  1. Visualizing Supply Chain Beta Relationships

# Create a network visualization of beta relationships
import plotly.graph_objects as go
# Prepare data for network graph
nodes = ['AAPL'] + supplier_tickers
node_x = []
node_y = []
node_colors = []
node_sizes = []
# Position Apple at center
node_x.append(0)
node_y.append(0)
node_colors.append('blue')
node_sizes.append(20)
# Position suppliers in a circle around Apple
import math
for i, supplier in enumerate(supplier_tickers):
    angle = 2 * math.pi * i / len(supplier_tickers)
    radius = 2
    node_x.append(radius * math.cos(angle))
    node_y.append(radius * math.sin(angle))
    
    # Color by beta value
    beta_val = beta_df[beta_df['Supplier'] == supplier]['Beta_vs_AAPL'].values[0]
    if beta_val > 0.5:
        node_colors.append('green')  # Strong positive correlation
    elif beta_val < -0.5:
        node_colors.append('red')    # Strong negative correlation
    else:
        node_colors.append('yellow') # Weak correlation
    
    node_sizes.append(15 + abs(beta_val) * 10)
# Create edges
edge_x = []
edge_y = []
edge_colors = []
for i, supplier in enumerate(supplier_tickers):
    beta_val = beta_df[beta_df['Supplier'] == supplier]['Beta_vs_AAPL'].values[0]
    
    # Add edge from Apple to supplier
    edge_x.extend([0, node_x[i+1], None])
    edge_y.extend([0, node_y[i+1], None])
    
    # Color edge by beta strength
    if abs(beta_val) > 0.7:
        edge_colors.append('rgba(0, 255, 0, 0.8)')
    elif abs(beta_val) > 0.3:
        edge_colors.append('rgba(255, 255, 0, 0.6)')
    else:
        edge_colors.append('rgba(255, 0, 0, 0.4)')
# Create the network graph
fig = go.Figure()
# Add edges
for i in range(0, len(edge_x)-1, 3):
    fig.add_trace(go.Scatter(
        x=edge_x[i:i+3],
        y=edge_y[i:i+3],
        mode='lines',
        line=dict(width=2, color=edge_colors[i//3]),
        hoverinfo='none'
    ))
# Add nodes
fig.add_trace(go.Scatter(
    x=node_x,
    y=node_y,
    mode='markers+text',
    marker=dict(
        size=node_sizes,
        color=node_colors,
        line=dict(width=2, color='DarkSlateGrey')
    ),
    text=nodes,
    textposition="top center",
    hoverinfo='text'
))
fig.update_layout(
    title='Supply Chain Beta Relationships: Apple and Key Suppliers',
    showlegend=False,
    hovermode='closest',
    margin=dict(b=20,l=5,r=5,t=40),
    xaxis=dict(showgrid=False, zeroline=False, showticklabels=False),
    yaxis=dict(showgrid=False, zeroline=False, showticklabels=False)
)
visualize(fig)

Practical Applications: Real-World Use Cases

  1. Risk Management

# Identify high-beta suppliers that could amplify Apple's risk
high_risk_suppliers = beta_df[beta_df['Beta_vs_AAPL'] > 0.8]
print(f"High-risk suppliers (Beta > 0.8): {len(high_risk_suppliers)}")
print("Consider diversifying away from these high-correlation suppliers")
  1. Leading Indicator Analysis

# Check if supplier prices lead Apple's price movements
def calculate_lead_lag_correlation(lead_ticker, lag_ticker, lag_days=5):
    lead_prices = get_price_history(lead_ticker)
    lag_prices = get_price_history(lag_ticker)
    
    # Shift the leading ticker's prices
    lead_prices['close_shifted'] = lead_prices['close'].shift(-lag_days)
    
    # Merge and calculate correlation
    merged = pd.merge(
        lead_prices[['time', 'close_shifted']],
        lag_prices[['time', 'close']],
        on='time'
    ).dropna()
    
    correlation = merged['close_shifted'].corr(merged['close'])
    return correlation
# Test if TSMC leads Apple
lead_corr = calculate_lead_lag_correlation("TSM", "AAPL", lag_days=3)
print(f"TSMC 3-day lead correlation with AAPL: {lead_corr:.3f}")
  1. Portfolio Construction

# Build a diversified portfolio across the supply chain
def build_supply_chain_portfolio(anchor_ticker, max_beta=0.5):
    """Select companies from the same supply chain with low mutual beta"""
    suppliers = client.supply_chain.suppliers(anchor_ticker)
    supplier_tickers = [s['ticker'] for s in suppliers[:10]]  # Top 10 suppliers
    
    portfolio = [anchor_ticker]
    
    for ticker in supplier_tickers:
        try:
            prices = get_price_history(ticker)
            if len(prices) > 0:
                # Calculate beta relative to existing portfolio
                max_existing_beta = 0
                for existing in portfolio:
                    combined = pd.merge(
                        get_price_history(existing)[['time', 'close']].rename(columns={'close': existing}),
                        prices[['time', 'close']].rename(columns={'close': ticker}),
                        on='time'
                    )
                    if len(combined) > 10:  # Minimum data points
                        beta_val = beta(combined, existing, ticker)
                        max_existing_beta = max(max_existing_beta, abs(beta_val))
                
                if max_existing_beta <= max_beta:
                    portfolio.append(ticker)
                    print(f"Added {ticker} to portfolio (max beta: {max_existing_beta:.3f})")
        except:
            continue
    
    return portfolio
diversified_portfolio = build_supply_chain_portfolio("AAPL", max_beta=0.3)
print(f"Diversified supply chain portfolio: {diversified_portfolio}")

Why Axion Makes This Analysis Effortless

The Axion SDK provides several key advantages for supply chain analysis:

  1. Unified Data Access: Single interface for supply chain data, financial data, and analytical tools
  2. Built-in Analytics: Pre-built functions for beta, correlation, and regression analysis
  3. Real-time Updates: Access to current supply chain relationships and price data
  4. Scalable Processing: Handle complex analyses across hundreds of companies
  5. Visualization Integration: Seamless plotting and charting capabilities

Advanced Technique: LSTM for Predictive Supply Chain Analysis

For those looking to apply machine learning to supply chain correlations:

from axion import lstm
# Use LSTM to predict Apple's price based on supplier patterns
lstm_predictions = lstm(
    df=analysis_df,
    x='time',
    target='AAPL',
    features=supplier_tickers,
    n_preds=30,
    scale='D'
)
print("LSTM predictions for next 30 days:")
visualize.line(lstm_predictions, x='time', y='AAPL')

Key Insights and Takeaways

  1. Beta reveals hidden dependencies: Companies with high beta to their supply chain partners share significant risk exposure.
  2. Supply chain diversification matters: Companies with diverse supplier bases show lower overall volatility.
  3. Early warning signals: Supplier stock movements often lead customer stock movements by days or weeks.
  4. Dynamic relationships: Supply chain correlations change over time and should be monitored regularly.
  5. Strategic investing: Understanding supply chain relationships helps identify:
  • Undervalued suppliers before their customers’ success
  • Overvalued companies with concentrated supply chain risks
  • M&A opportunities within supply chains

Getting Started with Your Own Analysis

Ready to uncover hidden relationships in your investment universe?

# Quick start template for your own analysis
def analyze_supply_chain_beta(company_ticker):
    """Complete supply chain beta analysis for any company"""
    
    # Initialize client
    client = Axion(api_key="your_api_key_here")
    
    # Get supply chain data
    suppliers = client.supply_chain.suppliers(company_ticker)
    supplier_tickers = [s['ticker'] for s in suppliers[:15]]
    
    # Get price data
    company_prices = get_price_history(company_ticker)
    
    # Calculate beta for each relationship
    results = []
    for supplier in supplier_tickers:
        try:
            supplier_prices = get_price_history(supplier)
            # Calculate beta and store results
            # ... (full implementation)
        except:
            continue
    
    return pd.DataFrame(results)
# Run your analysis
results = analyze_supply_chain_beta("MSFT")  # Try with Microsoft
print(results)

Conclusion

Supply chain beta analysis is a powerful tool for investors, risk managers, and corporate strategists. By understanding how companies within a supply chain influence each other, you can make more informed decisions, better manage risk, and identify opportunities that others might miss.

The Axion SDK democratizes this complex analysis, making it accessible to everyone from individual investors to institutional analysts. With just a few lines of code, you can uncover relationships that could take weeks to discover through traditional research methods.

Start uncovering hidden supply chain relationships today. Whether you’re managing a portfolio, assessing corporate risk, or researching investment opportunities, combining beta analysis with supply chain data gives you a competitive edge in understanding today’s interconnected markets.