Correlation Between Azure Power and Blue Apron

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

Diversification Opportunities for Azure Power and Blue Apron

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Azure and Blue Apron is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Azure Power Global and Blue Apron Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Apron Holdings and Azure Power 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 Power Global are associated (or correlated) with Blue Apron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Apron Holdings has no effect on the direction of Azure Power i.e., Azure Power and Blue Apron go up and down completely randomly.

Pair Corralation between Azure Power and Blue Apron

Given the investment horizon of 90 days Azure Power Global is expected to generate 0.56 times more return on investment than Blue Apron. However, Azure Power Global is 1.78 times less risky than Blue Apron. It trades about 0.01 of its potential returns per unit of risk. Blue Apron Holdings is currently generating about -0.35 per unit of risk. If you would invest  579.00  in Azure Power Global on September 1, 2022 and sell it today you would lose (8.00)  from holding Azure Power Global or give up 1.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Azure Power Global  vs.  Blue Apron Holdings

 Performance (%) 
       Timeline  
Azure Power Global 
Azure Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Azure Power Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Azure Power exhibited solid returns over the last few months and may actually be approaching a breakup point.

Azure Price Channel

Blue Apron Holdings 
Blue Apron Performance
0 of 100
Over the last 90 days Blue Apron Holdings 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 quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Blue Apron Price Channel

Azure Power and Blue Apron Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Azure Power and Blue Apron

The main advantage of trading using opposite Azure Power and Blue Apron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azure Power position performs unexpectedly, Blue Apron 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 Blue Apron will offset losses from the drop in Blue Apron's long position.
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The idea behind Azure Power Global and Blue Apron Holdings 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.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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