Correlation Between BRC and Azure Holding

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

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

Diversification Opportunities for BRC and Azure Holding

0.42

Correlation Coefficient

BRC  Azure Holding

Very weak diversification

The 3 months correlation between BRC and Azure is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and Azure Holding Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Holding Group and BRC 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 BRC Inc are associated (or correlated) with Azure Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Holding Group has no effect on the direction of BRC i.e., BRC and Azure Holding go up and down completely randomly.

Pair Corralation between BRC and Azure Holding

Given the investment horizon of 90 days BRC Inc is expected to under-perform the Azure Holding. But the stock apears to be less risky and, when comparing its historical volatility, BRC Inc is 18.04 times less risky than Azure Holding. The stock trades about -0.01 of its potential returns per unit of risk. The Azure Holding Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Azure Holding Group on October 10, 2024 and sell it today you would earn a total of  10.98  from holding Azure Holding Group or generate 54900.0% return on investment over 90 days.

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

BRC Inc  vs.  Azure Holding Group

BRC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BRC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Azure Holding Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Azure Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRC and Azure Holding

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

The idea behind BRC Inc and Azure Holding Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.