Correlation Between Amazon and ANGLO ASIAN
Can any of the company-specific risk be diversified away by investing in both Amazon and ANGLO ASIAN 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 ANGLO ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ANGLO ASIAN MINING, you can compare the effects of market volatilities on Amazon and ANGLO ASIAN 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 ANGLO ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ANGLO ASIAN.
Diversification Opportunities for Amazon and ANGLO ASIAN
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and ANGLO is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and ANGLO ASIAN MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGLO ASIAN MINING 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 ANGLO ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGLO ASIAN MINING has no effect on the direction of Amazon i.e., Amazon and ANGLO ASIAN go up and down completely randomly.
Pair Corralation between Amazon and ANGLO ASIAN
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.85 times more return on investment than ANGLO ASIAN. However, Amazon Inc is 1.17 times less risky than ANGLO ASIAN. It trades about -0.01 of its potential returns per unit of risk. ANGLO ASIAN MINING is currently generating about -0.06 per unit of risk. If you would invest 21,665 in Amazon Inc on October 11, 2024 and sell it today you would lose (85.00) from holding Amazon Inc or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. ANGLO ASIAN MINING
Performance |
| Timeline |
| Amazon Inc |
| ANGLO ASIAN MINING |
Amazon and ANGLO ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and ANGLO ASIAN
The main advantage of trading using opposite Amazon and ANGLO ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, ANGLO ASIAN 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 ANGLO ASIAN will offset losses from the drop in ANGLO ASIAN's long position.The idea behind Amazon Inc and ANGLO ASIAN MINING 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.| ANGLO ASIAN vs. TITANIUM TRANSPORTGROUP | ANGLO ASIAN vs. COVIVIO HOTELS INH | ANGLO ASIAN vs. DALATA HOTEL | ANGLO ASIAN vs. Choice Hotels International |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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