Correlation Between Azimut Holding and Aimia

Can any of the company-specific risk be diversified away by investing in both Azimut Holding and Aimia 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 Aimia 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 Aimia Inc, you can compare the effects of market volatilities on Azimut Holding and Aimia 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 Aimia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azimut Holding and Aimia.

Diversification Opportunities for Azimut Holding and Aimia

-0.27

Correlation Coefficient

Azimut Holding  Aimia

Very good diversification

The 3 months correlation between Azimut and Aimia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Azimut Holding SpA and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc 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 Aimia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimia Inc has no effect on the direction of Azimut Holding i.e., Azimut Holding and Aimia go up and down completely randomly.

Pair Corralation between Azimut Holding and Aimia

Assuming the 90 days horizon Azimut Holding SpA is expected to generate 2.23 times more return on investment than Aimia. However, Azimut Holding is 2.23 times more volatile than Aimia Inc. It trades about 0.12 of its potential returns per unit of risk. Aimia Inc is currently generating about 0.01 per unit of risk. If you would invest  2,392  in Azimut Holding SpA on December 29, 2024 and sell it today you would earn a total of  598.00  from holding Azimut Holding SpA or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Azimut Holding SpA  vs.  Aimia Inc

Azimut Holding SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Azimut Holding SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Azimut Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Aimia Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Azimut Holding and Aimia

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

The idea behind Azimut Holding SpA and Aimia Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.