Correlation Between Phytohealth Corp and Azion

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

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

Diversification Opportunities for Phytohealth Corp and Azion

0.87

Correlation Coefficient

Phytohealth Corp  Azion

Very poor diversification

The 3 months correlation between Phytohealth and Azion is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Phytohealth Corp and Azion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azion and Phytohealth Corp 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 Phytohealth Corp are associated (or correlated) with Azion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azion has no effect on the direction of Phytohealth Corp i.e., Phytohealth Corp and Azion go up and down completely randomly.

Pair Corralation between Phytohealth Corp and Azion

Assuming the 90 days trading horizon Phytohealth Corp is expected to generate 12.28 times less return on investment than Azion. But when comparing it to its historical volatility, Phytohealth Corp is 1.65 times less risky than Azion. It trades about 0.01 of its potential returns per unit of risk. Azion is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,307  in Azion on February 29, 2024 and sell it today you would earn a total of  1,673  from holding Azion or generate 128.0% return on investment over 90 days.

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

Phytohealth Corp  vs.  Azion

Phytohealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phytohealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Azion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Phytohealth Corp and Azion

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

The idea behind Phytohealth Corp and Azion 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.