Correlation Between Azure Holding and First Colombia

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

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

Diversification Opportunities for Azure Holding and First Colombia

-0.44

Correlation Coefficient

Azure Holding  First Colombia

Very good diversification

The 3 months correlation between Azure and First is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Azure Holding Group and First Colombia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Colombia Gold and Azure Holding 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 Azure Holding Group are associated (or correlated) with First Colombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Colombia Gold has no effect on the direction of Azure Holding i.e., Azure Holding and First Colombia go up and down completely randomly.

Pair Corralation between Azure Holding and First Colombia

Given the investment horizon of 90 days Azure Holding is expected to generate 4.07 times less return on investment than First Colombia. But when comparing it to its historical volatility, Azure Holding Group is 2.13 times less risky than First Colombia. It trades about 0.09 of its potential returns per unit of risk. First Colombia Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.03  in First Colombia Gold on September 13, 2024 and sell it today you would lose (0.02) from holding First Colombia Gold or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.58%
Values	Daily Returns

Azure Holding Group  vs.  First Colombia Gold

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.

First Colombia Gold

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Colombia Gold are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, First Colombia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azure Holding and First Colombia

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

The idea behind Azure Holding Group and First Colombia Gold 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.