Correlation Between Amazon and Thai Oil
Can any of the company-specific risk be diversified away by investing in both Amazon and Thai Oil 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 Amazon and Thai Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Thai Oil Public, you can compare the effects of market volatilities on Amazon and Thai Oil 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 Amazon with a short position of Thai Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Thai Oil.
Diversification Opportunities for Amazon and Thai Oil
Pay attention - limited upside
The 3 months correlation between Amazon and Thai is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Thai Oil Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Oil Public and Amazon 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 Amazon Inc are associated (or correlated) with Thai Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Oil Public has no effect on the direction of Amazon i.e., Amazon and Thai Oil go up and down completely randomly.
Pair Corralation between Amazon and Thai Oil
Assuming the 90 days horizon Amazon Inc is expected to generate 0.85 times more return on investment than Thai Oil. However, Amazon Inc is 1.17 times less risky than Thai Oil. It trades about 0.08 of its potential returns per unit of risk. Thai Oil Public is currently generating about -0.06 per unit of risk. If you would invest 16,632 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 3,050 from holding Amazon Inc or generate 18.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Thai Oil Public
Performance |
| Timeline |
| Amazon Inc |
| Thai Oil Public |
Amazon and Thai Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Thai Oil
The main advantage of trading using opposite Amazon and Thai Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Thai Oil 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 Thai Oil will offset losses from the drop in Thai Oil's long position.| Amazon vs. Virtus Investment Partners | Amazon vs. Air Lease | Amazon vs. Chuangs China Investments | Amazon vs. ADRIATIC METALS LS 013355 |
| Thai Oil vs. Thai Oil Public | Thai Oil vs. IRPC Public | Thai Oil vs. Sinopec Shanghai Petrochemical | Thai Oil vs. IRPC PCL NVDR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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