Correlation Between Axilion Smart and Azorim Investment

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

By analyzing existing cross correlation between Axilion Smart Mobility and Azorim Investment Development, you can compare the effects of market volatilities on Axilion Smart and Azorim Investment 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 Axilion Smart with a short position of Azorim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axilion Smart and Azorim Investment.

Diversification Opportunities for Axilion Smart and Azorim Investment

0.78

Correlation Coefficient

Axilion Smart  Azorim Investment

Poor diversification

The 3 months correlation between Axilion and Azorim is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Axilion Smart Mobility and Azorim Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azorim Investment and Axilion Smart 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 Axilion Smart Mobility are associated (or correlated) with Azorim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azorim Investment has no effect on the direction of Axilion Smart i.e., Axilion Smart and Azorim Investment go up and down completely randomly.

Pair Corralation between Axilion Smart and Azorim Investment

Assuming the 90 days trading horizon Axilion Smart Mobility is expected to under-perform the Azorim Investment. In addition to that, Axilion Smart is 1.37 times more volatile than Azorim Investment Development. It trades about -0.27 of its total potential returns per unit of risk. Azorim Investment Development is currently generating about -0.17 per unit of volatility. If you would invest  210,600  in Azorim Investment Development on December 30, 2024 and sell it today you would lose (47,700) from holding Azorim Investment Development or give up 22.65% of portfolio value over 90 days.

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

Axilion Smart Mobility  vs.  Azorim Investment Development

Axilion Smart Mobility

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axilion Smart Mobility has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Azorim Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Azorim Investment Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Axilion Smart and Azorim Investment

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

The idea behind Axilion Smart Mobility and Azorim Investment Development 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.