Correlation Between M3 Brigade and Azure Holding

Can any of the company-specific risk be diversified away by investing in both M3 Brigade 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 M3 Brigade and Azure Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between M3 Brigade Acquisition and Azure Holding Group, you can compare the effects of market volatilities on M3 Brigade 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 M3 Brigade with a short position of Azure Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Brigade and Azure Holding.

Diversification Opportunities for M3 Brigade and Azure Holding

0.63

Correlation Coefficient

M3 Brigade  Azure Holding

Poor diversification

The 3 months correlation between MBSC and Azure is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding M3 Brigade Acquisition 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 M3 Brigade 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 M3 Brigade Acquisition 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 M3 Brigade i.e., M3 Brigade and Azure Holding go up and down completely randomly.

Pair Corralation between M3 Brigade and Azure Holding

If you would invest  16.00  in Azure Holding Group on September 13, 2024 and sell it today you would lose (3.00) from holding Azure Holding Group or give up 18.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

M3 Brigade Acquisition  vs.  Azure Holding Group

M3 Brigade Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M3 Brigade Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, M3 Brigade is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Azure Holding Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Azure Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with M3 Brigade and Azure Holding

The main advantage of trading using opposite M3 Brigade and Azure Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Brigade 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 M3 Brigade Acquisition 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.