Correlation Between Paladin Energy and Azincourt Uranium

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

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

Diversification Opportunities for Paladin Energy and Azincourt Uranium

0.38

Correlation Coefficient

Paladin Energy  Azincourt Uranium

Weak diversification

The 3 months correlation between Paladin and Azincourt is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Paladin Energy and Azincourt Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azincourt Uranium and Paladin Energy 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 Paladin Energy are associated (or correlated) with Azincourt Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azincourt Uranium has no effect on the direction of Paladin Energy i.e., Paladin Energy and Azincourt Uranium go up and down completely randomly.

Pair Corralation between Paladin Energy and Azincourt Uranium

Assuming the 90 days horizon Paladin Energy is expected to generate 0.49 times more return on investment than Azincourt Uranium. However, Paladin Energy is 2.03 times less risky than Azincourt Uranium. It trades about -0.2 of its potential returns per unit of risk. Azincourt Uranium is currently generating about -0.1 per unit of risk. If you would invest  811.00  in Paladin Energy on September 13, 2024 and sell it today you would lose (323.00) from holding Paladin Energy or give up 39.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Paladin Energy  vs.  Azincourt Uranium

Paladin Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paladin Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Azincourt Uranium

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azincourt Uranium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Azincourt Uranium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paladin Energy and Azincourt Uranium

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

The idea behind Paladin Energy and Azincourt Uranium 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 Stocks Directory module to find actively traded stocks across global markets.