Correlation Between Vodka Brands and Azure Holding

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

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

Diversification Opportunities for Vodka Brands and Azure Holding

-0.1

Correlation Coefficient

Vodka Brands  Azure Holding

Good diversification

The 3 months correlation between Vodka and Azure is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp 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 Vodka Brands 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 Vodka Brands Corp 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 Vodka Brands i.e., Vodka Brands and Azure Holding go up and down completely randomly.

Pair Corralation between Vodka Brands and Azure Holding

Given the investment horizon of 90 days Vodka Brands is expected to generate 5.56 times less return on investment than Azure Holding. But when comparing it to its historical volatility, Vodka Brands Corp is 6.4 times less risky than Azure Holding. It trades about 0.29 of its potential returns per unit of risk. Azure Holding Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Azure Holding Group on September 5, 2024 and sell it today you would earn a total of  11.00  from holding Azure Holding Group or generate 110.0% return on investment over 90 days.

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

Vodka Brands Corp  vs.  Azure Holding Group

Vodka Brands Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vodka Brands Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward-looking signals, Vodka Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Azure Holding Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Azure Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vodka Brands and Azure Holding

The main advantage of trading using opposite Vodka Brands and Azure Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands 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 Vodka Brands Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.