Correlation Between Kedge Construction and AzureWave Technologies

Can any of the company-specific risk be diversified away by investing in both Kedge Construction and AzureWave Technologies 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 Kedge Construction and AzureWave Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kedge Construction Co and AzureWave Technologies, you can compare the effects of market volatilities on Kedge Construction and AzureWave Technologies 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 Kedge Construction with a short position of AzureWave Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedge Construction and AzureWave Technologies.

Diversification Opportunities for Kedge Construction and AzureWave Technologies

-0.61

Correlation Coefficient

Kedge Construction  AzureWave Technologies

Excellent diversification

The 3 months correlation between Kedge and AzureWave is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kedge Construction Co and AzureWave Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AzureWave Technologies and Kedge Construction 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 Kedge Construction Co are associated (or correlated) with AzureWave Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AzureWave Technologies has no effect on the direction of Kedge Construction i.e., Kedge Construction and AzureWave Technologies go up and down completely randomly.

Pair Corralation between Kedge Construction and AzureWave Technologies

Assuming the 90 days trading horizon Kedge Construction is expected to generate 3.26 times less return on investment than AzureWave Technologies. But when comparing it to its historical volatility, Kedge Construction Co is 1.72 times less risky than AzureWave Technologies. It trades about 0.04 of its potential returns per unit of risk. AzureWave Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,020  in AzureWave Technologies on October 22, 2024 and sell it today you would earn a total of  3,710  from holding AzureWave Technologies or generate 183.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Kedge Construction Co  vs.  AzureWave Technologies

Kedge Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kedge Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kedge Construction is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AzureWave Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AzureWave Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AzureWave Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kedge Construction and AzureWave Technologies

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

The idea behind Kedge Construction Co and AzureWave Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.