Correlation Between Azure Power and Xos Equity

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

Diversification Opportunities for Azure Power and Xos Equity

0.0

Correlation Coefficient

Azure Power  Xos Equity

Pay attention - limited upside

The 3 months correlation between Azure and Xos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Azure Power Global and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants 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 Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Azure Power i.e., Azure Power and Xos Equity go up and down completely randomly.

Pair Corralation between Azure Power and Xos Equity

Assuming the 90 days horizon Azure Power Global is expected to generate 6.91 times more return on investment than Xos Equity. However, Azure Power is 6.91 times more volatile than Xos Equity Warrants. It trades about 0.19 of its potential returns per unit of risk. Xos Equity Warrants is currently generating about 0.08 per unit of risk. If you would invest  40.00  in Azure Power Global on July 19, 2025 and sell it today you would earn a total of  60.00  from holding Azure Power Global or generate 150.0% return on investment over 90 days.

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

Azure Power Global  vs.  Xos Equity Warrants

Azure Power Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Power Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Azure Power reported solid returns over the last few months and may actually be approaching a breakup point.

Xos Equity Warrants

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azure Power and Xos Equity

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

The idea behind Azure Power Global and Xos Equity Warrants 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.