Correlation Between Commerce Resources and Azimut Exploration

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

By analyzing existing cross correlation between Commerce Resources Corp and Azimut Exploration, you can compare the effects of market volatilities on Commerce Resources and Azimut Exploration 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 Commerce Resources with a short position of Azimut Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Resources and Azimut Exploration.

Diversification Opportunities for Commerce Resources and Azimut Exploration

0.07

Correlation Coefficient

Commerce Resources  Azimut Exploration

Significant diversification

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

Pair Corralation between Commerce Resources and Azimut Exploration

Assuming the 90 days horizon Commerce Resources is expected to generate 3.06 times less return on investment than Azimut Exploration. In addition to that, Commerce Resources is 1.61 times more volatile than Azimut Exploration. It trades about 0.02 of its total potential returns per unit of risk. Azimut Exploration is currently generating about 0.08 per unit of volatility. If you would invest  38.00  in Azimut Exploration on September 3, 2024 and sell it today you would earn a total of  8.00  from holding Azimut Exploration or generate 21.05% return on investment over 90 days.

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

Commerce Resources Corp  vs.  Azimut Exploration

Commerce Resources Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Commerce Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Azimut Exploration

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Commerce Resources and Azimut Exploration

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

The idea behind Commerce Resources Corp and Azimut Exploration 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.