Correlation Between Renew Energy and Azure Power
Can any of the company-specific risk be diversified away by investing in both Renew Energy 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 Renew Energy and Azure Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renew Energy Global and Azure Power Global, you can compare the effects of market volatilities on Renew Energy 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 Renew Energy with a short position of Azure Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renew Energy and Azure Power.
Diversification Opportunities for Renew Energy and Azure Power
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Renew and Azure is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Renew Energy Global 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 Renew 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 Renew Energy Global 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 Renew Energy i.e., Renew Energy and Azure Power go up and down completely randomly.
Pair Corralation between Renew Energy and Azure Power
Considering the 90-day investment horizon Renew Energy Global is expected to generate 0.34 times more return on investment than Azure Power. However, Renew Energy Global is 2.92 times less risky than Azure Power. It trades about 0.02 of its potential returns per unit of risk. Azure Power Global is currently generating about -0.12 per unit of risk. If you would invest 571.00 in Renew Energy Global on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Renew Energy Global or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 30.65% |
| Values | Daily Returns |
Renew Energy Global vs. Azure Power Global
Performance |
| Timeline |
| Renew Energy Global |
| Azure Power Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Renew Energy and Azure Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renew Energy and Azure Power
The main advantage of trading using opposite Renew Energy and Azure Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renew Energy 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.| Renew Energy vs. Fusion Fuel Green | Renew Energy vs. Advent Technologies Holdings | Renew Energy vs. Eos Energy Enterprises | Renew Energy vs. CuriosityStream |
| Azure Power vs. Altus Power | Azure Power vs. Ormat Technologies | Azure Power vs. Enlight Renewable Energy | Azure Power vs. Fluence Energy |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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