Correlation Between AzureWave Technologies and HOYA Resort

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

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

Diversification Opportunities for AzureWave Technologies and HOYA Resort

0.57

Correlation Coefficient

AzureWave Technologies  HOYA Resort

Very weak diversification

The 3 months correlation between AzureWave and HOYA is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding AzureWave Technologies and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel and AzureWave Technologies 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 AzureWave Technologies are associated (or correlated) with HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of AzureWave Technologies i.e., AzureWave Technologies and HOYA Resort go up and down completely randomly.

Pair Corralation between AzureWave Technologies and HOYA Resort

Assuming the 90 days trading horizon AzureWave Technologies is expected to generate 1.35 times more return on investment than HOYA Resort. However, AzureWave Technologies is 1.35 times more volatile than HOYA Resort Hotel. It trades about 0.1 of its potential returns per unit of risk. HOYA Resort Hotel is currently generating about 0.12 per unit of risk. If you would invest  5,130  in AzureWave Technologies on October 11, 2024 and sell it today you would earn a total of  430.00  from holding AzureWave Technologies or generate 8.38% return on investment over 90 days.

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

AzureWave Technologies  vs.  HOYA Resort Hotel

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.

HOYA Resort Hotel

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Resort Hotel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, HOYA Resort may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AzureWave Technologies and HOYA Resort

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

The idea behind AzureWave Technologies and HOYA Resort Hotel 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.