Correlation Between Collective Mining and Azure Power

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Can any of the company-specific risk be diversified away by investing in both Collective Mining and Azure Power 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 Collective Mining and Azure Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collective Mining and Azure Power Global, you can compare the effects of market volatilities on Collective Mining and Azure Power 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 Collective Mining with a short position of Azure Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collective Mining and Azure Power.

Diversification Opportunities for Collective Mining and Azure Power

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Collective and Azure is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Collective Mining and Azure Power Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Power Global and Collective Mining 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 Collective Mining are associated (or correlated) with Azure Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Power Global has no effect on the direction of Collective Mining i.e., Collective Mining and Azure Power go up and down completely randomly.

Pair Corralation between Collective Mining and Azure Power

If you would invest  331.00  in Collective Mining on September 5, 2024 and sell it today you would earn a total of  29.00  from holding Collective Mining or generate 8.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy1.56%
ValuesDaily Returns

Collective Mining  vs.  Azure Power Global

 Performance 
       Timeline  
Collective Mining 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Collective Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Azure Power Global 

Risk-Adjusted Performance

0 of 100

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

Collective Mining and Azure Power Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Collective Mining and Azure Power

The main advantage of trading using opposite Collective Mining and Azure Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collective Mining position performs unexpectedly, Azure Power 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 Power will offset losses from the drop in Azure Power's long position.
The idea behind Collective Mining and Azure Power Global 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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