Correlation Between Azure Holding and TARGET

Can any of the company-specific risk be diversified away by investing in both Azure Holding and TARGET 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 TARGET 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 TARGET P 7, you can compare the effects of market volatilities on Azure Holding and TARGET 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 TARGET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azure Holding and TARGET.

Diversification Opportunities for Azure Holding and TARGET

0.07

Correlation Coefficient

Azure Holding  TARGET

Significant diversification

The 3 months correlation between Azure and TARGET is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Azure Holding Group and TARGET P 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TARGET P 7 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 TARGET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TARGET P 7 has no effect on the direction of Azure Holding i.e., Azure Holding and TARGET go up and down completely randomly.

Pair Corralation between Azure Holding and TARGET

Given the investment horizon of 90 days Azure Holding Group is expected to generate 11.57 times more return on investment than TARGET. However, Azure Holding is 11.57 times more volatile than TARGET P 7. It trades about 0.15 of its potential returns per unit of risk. TARGET P 7 is currently generating about 0.11 per unit of risk. If you would invest  4.70  in Azure Holding Group on October 24, 2024 and sell it today you would earn a total of  4.79  from holding Azure Holding Group or generate 101.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.51%
Values	Daily Returns

Azure Holding Group  vs.  TARGET P 7

Azure Holding Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 6 (%) 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.

TARGET P 7

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TARGET P 7 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, TARGET sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azure Holding and TARGET

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

The idea behind Azure Holding Group and TARGET P 7 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.