Correlation Between Azure Holding and Gemz Corp

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

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

Diversification Opportunities for Azure Holding and Gemz Corp

0.14

Correlation Coefficient

Azure Holding  Gemz Corp

Average diversification

The 3 months correlation between Azure and Gemz is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Azure Holding Group and Gemz Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemz Corp and Azure 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 Azure Holding Group are associated (or correlated) with Gemz Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemz Corp has no effect on the direction of Azure Holding i.e., Azure Holding and Gemz Corp go up and down completely randomly.

Pair Corralation between Azure Holding and Gemz Corp

Given the investment horizon of 90 days Azure Holding is expected to generate 1.48 times less return on investment than Gemz Corp. But when comparing it to its historical volatility, Azure Holding Group is 1.56 times less risky than Gemz Corp. It trades about 0.19 of its potential returns per unit of risk. Gemz Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Gemz Corp on September 16, 2024 and sell it today you would earn a total of  0.01  from holding Gemz Corp or generate 33.33% return on investment over 90 days.

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

Azure Holding Group  vs.  Gemz Corp

Azure Holding Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Azure Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Gemz Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gemz Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Gemz Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azure Holding and Gemz Corp

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

The idea behind Azure Holding Group and Gemz Corp 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.