Correlation Between Azek and Vir Biotechnology

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

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

Diversification Opportunities for Azek and Vir Biotechnology

-0.3

Correlation Coefficient

Azek  Vir Biotechnology

Very good diversification

The 3 months correlation between Azek and Vir is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Vir Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vir Biotechnology and Azek 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 Azek Company are associated (or correlated) with Vir Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vir Biotechnology has no effect on the direction of Azek i.e., Azek and Vir Biotechnology go up and down completely randomly.

Pair Corralation between Azek and Vir Biotechnology

Given the investment horizon of 90 days Azek Company is expected to generate 0.4 times more return on investment than Vir Biotechnology. However, Azek Company is 2.53 times less risky than Vir Biotechnology. It trades about 0.17 of its potential returns per unit of risk. Vir Biotechnology is currently generating about -0.03 per unit of risk. If you would invest  4,963  in Azek Company on May 6, 2025 and sell it today you would earn a total of  472.00  from holding Azek Company or generate 9.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Azek Company  vs.  Vir Biotechnology

Azek Company

Risk-Adjusted Performance

Good

Over the last 90 days Azek Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak technical and fundamental indicators, Azek disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vir Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vir Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Azek and Vir Biotechnology

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

The idea behind Azek Company and Vir Biotechnology 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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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..