Correlation Between Azimut Holding and Agronomics

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

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

Diversification Opportunities for Azimut Holding and Agronomics

-0.39

Correlation Coefficient

Azimut Holding  Agronomics

Very good diversification

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

Pair Corralation between Azimut Holding and Agronomics

Assuming the 90 days horizon Azimut Holding SpA is expected to generate 0.3 times more return on investment than Agronomics. However, Azimut Holding SpA is 3.3 times less risky than Agronomics. It trades about 0.0 of its potential returns per unit of risk. Agronomics Limited is currently generating about -0.02 per unit of risk. 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

Azimut Holding SpA  vs.  Agronomics Limited

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.

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.

Pair Trading with Azimut Holding and Agronomics

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

The idea behind Azimut Holding SpA and Agronomics Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..