Correlation Between Azure Holding and Power Metals

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

Diversification Opportunities for Azure Holding and Power Metals

-0.44

Correlation Coefficient

Azure Holding  Power Metals

Very good diversification

The 3 months correlation between Azure and Power is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Azure Holding Group and Power Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metals 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 Power Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metals Corp has no effect on the direction of Azure Holding i.e., Azure Holding and Power Metals go up and down completely randomly.

Pair Corralation between Azure Holding and Power Metals

Given the investment horizon of 90 days Azure Holding Group is expected to under-perform the Power Metals. In addition to that, Azure Holding is 7.15 times more volatile than Power Metals Corp. It trades about -0.08 of its total potential returns per unit of risk. Power Metals Corp is currently generating about 0.07 per unit of volatility. If you would invest  31.00  in Power Metals Corp on October 12, 2024 and sell it today you would earn a total of  1.00  from holding Power Metals Corp or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Azure Holding Group  vs.  Power Metals Corp

Azure Holding Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 3 (%) 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.

Power Metals Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Power Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azure Holding and Power Metals

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

The idea behind Azure Holding Group and Power Metals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.