Correlation Between Azure Holding and Kasten

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

Diversification Opportunities for Azure Holding and Kasten

0.52

Correlation Coefficient

Azure Holding  Kasten

Very weak diversification

The 3 months correlation between Azure and Kasten is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Azure Holding Group and Kasten Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kasten Inc 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 Kasten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kasten Inc has no effect on the direction of Azure Holding i.e., Azure Holding and Kasten go up and down completely randomly.

Pair Corralation between Azure Holding and Kasten

Given the investment horizon of 90 days Azure Holding is expected to generate 1.2 times less return on investment than Kasten. But when comparing it to its historical volatility, Azure Holding Group is 1.54 times less risky than Kasten. It trades about 0.12 of its potential returns per unit of risk. Kasten Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Kasten Inc on December 27, 2024 and sell it today you would lose (0.07) from holding Kasten Inc or give up 11.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Azure Holding Group  vs.  Kasten Inc

Azure Holding Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Azure Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kasten Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kasten Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kasten unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azure Holding and Kasten

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

The idea behind Azure Holding Group and Kasten 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.