Correlation Between Urbana and Azimut Holding

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

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

Diversification Opportunities for Urbana and Azimut Holding

0.59

Correlation Coefficient

Urbana  Azimut Holding

Very weak diversification

The 3 months correlation between Urbana and Azimut is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Urbana and Azimut Holding SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Holding SpA and Urbana 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 Urbana are associated (or correlated) with Azimut Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Holding SpA has no effect on the direction of Urbana i.e., Urbana and Azimut Holding go up and down completely randomly.

Pair Corralation between Urbana and Azimut Holding

Assuming the 90 days horizon Urbana is expected to generate 2.05 times less return on investment than Azimut Holding. But when comparing it to its historical volatility, Urbana is 1.41 times less risky than Azimut Holding. It trades about 0.08 of its potential returns per unit of risk. Azimut Holding SpA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,392  in Azimut Holding SpA on December 29, 2024 and sell it today you would earn a total of  598.00  from holding Azimut Holding SpA or generate 25.0% return on investment over 90 days.

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

Urbana  vs.  Azimut Holding SpA

Urbana

Risk-Adjusted Performance

Modest

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

Azimut Holding SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Azimut Holding SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Azimut Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Urbana and Azimut Holding

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

The idea behind Urbana and Azimut Holding SpA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.