Correlation Between Azure Power and Datadog

Can any of the company-specific risk be diversified away by investing in both Azure Power and Datadog 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 Datadog 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 Datadog, you can compare the effects of market volatilities on Azure Power and Datadog 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 Datadog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azure Power and Datadog.

Diversification Opportunities for Azure Power and Datadog

0.04

Correlation Coefficient

Azure Power  Datadog

Significant diversification

The 3 months correlation between Azure and Datadog is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Azure Power Global and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog 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 Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of Azure Power i.e., Azure Power and Datadog go up and down completely randomly.

Pair Corralation between Azure Power and Datadog

Assuming the 90 days horizon Azure Power Global is expected to generate 11.77 times more return on investment than Datadog. However, Azure Power is 11.77 times more volatile than Datadog. It trades about 0.13 of its potential returns per unit of risk. Datadog is currently generating about 0.06 per unit of risk. If you would invest  50.00  in Azure Power Global on May 27, 2025 and sell it today you would lose (28.00) from holding Azure Power Global or give up 56.0% of portfolio value over 90 days.

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

Azure Power Global  vs.  Datadog

Azure Power Global

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Power Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Azure Power reported solid returns over the last few months and may actually be approaching a breakup point.

Datadog

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Datadog may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Azure Power and Datadog

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

The idea behind Azure Power Global and Datadog 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.