Correlation Between Agronomics and Azimut Holding

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

By analyzing existing cross correlation between Agronomics Limited and Azimut Holding SpA, you can compare the effects of market volatilities on Agronomics and Azimut Holding 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 Agronomics with a short position of Azimut Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agronomics and Azimut Holding.

Diversification Opportunities for Agronomics and Azimut Holding

-0.39

Correlation Coefficient

Agronomics  Azimut Holding

Very good diversification

The 3 months correlation between Agronomics and Azimut is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Agronomics Limited and Azimut Holding SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Holding SpA and Agronomics 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 Agronomics Limited are associated (or correlated) with Azimut Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Holding SpA has no effect on the direction of Agronomics i.e., Agronomics and Azimut Holding go up and down completely randomly.

Pair Corralation between Agronomics and Azimut Holding

Assuming the 90 days horizon Agronomics Limited is expected to under-perform the Azimut Holding. In addition to that, Agronomics is 3.3 times more volatile than Azimut Holding SpA. It trades about -0.02 of its total potential returns per unit of risk. Azimut Holding SpA is currently generating about 0.0 per unit of volatility. If you would invest  2,542  in Azimut Holding SpA on August 31, 2024 and sell it today you would lose (52.00) from holding Azimut Holding SpA or give up 2.05% of portfolio value over 90 days.

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

Agronomics Limited  vs.  Azimut Holding SpA

Agronomics Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agronomics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Azimut Holding SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azimut Holding SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Azimut Holding is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Agronomics and Azimut Holding

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

The idea behind Agronomics Limited and Azimut Holding SpA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..