Correlation Between Azimut Exploration and VR Resources

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

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

Diversification Opportunities for Azimut Exploration and VR Resources

0.74

Correlation Coefficient

Azimut Exploration  VR Resources

Poor diversification

The 3 months correlation between Azimut and VRRCF is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Azimut Exploration and VR Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VR Resources and Azimut Exploration 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 Exploration are associated (or correlated) with VR Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VR Resources has no effect on the direction of Azimut Exploration i.e., Azimut Exploration and VR Resources go up and down completely randomly.

Pair Corralation between Azimut Exploration and VR Resources

Assuming the 90 days horizon Azimut Exploration is expected to generate 0.34 times more return on investment than VR Resources. However, Azimut Exploration is 2.91 times less risky than VR Resources. It trades about -0.06 of its potential returns per unit of risk. VR Resources is currently generating about -0.08 per unit of risk. If you would invest  41.00  in Azimut Exploration on December 29, 2024 and sell it today you would lose (6.00) from holding Azimut Exploration or give up 14.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Azimut Exploration  vs.  VR Resources

Azimut Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Azimut Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

VR Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days VR Resources 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 fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Azimut Exploration and VR Resources

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

The idea behind Azimut Exploration and VR Resources 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..