Correlation Between Azul SA and International Media

Can any of the company-specific risk be diversified away by investing in both Azul SA and International Media 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 Azul SA and International Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Azul SA and International Media Acquisition, you can compare the effects of market volatilities on Azul SA and International Media 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 Azul SA with a short position of International Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and International Media.

Diversification Opportunities for Azul SA and International Media

0.7

Correlation Coefficient

Azul SA  International Media

Poor diversification

The 3 months correlation between Azul and International is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and International Media Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Media and Azul SA 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 Azul SA are associated (or correlated) with International Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Media has no effect on the direction of Azul SA i.e., Azul SA and International Media go up and down completely randomly.

Pair Corralation between Azul SA and International Media

Given the investment horizon of 90 days Azul SA is expected to under-perform the International Media. But the stock apears to be less risky and, when comparing its historical volatility, Azul SA is 17.13 times less risky than International Media. The stock trades about -0.08 of its potential returns per unit of risk. The International Media Acquisition is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5.01  in International Media Acquisition on October 4, 2024 and sell it today you would earn a total of  0.99  from holding International Media Acquisition or generate 19.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	42.63%
Values	Daily Returns

Azul SA  vs.  International Media Acquisitio

Azul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azul SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Media Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, International Media is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Azul SA and International Media

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

The idea behind Azul SA and International Media Acquisition 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.