Correlation Between Amazon and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both Amazon and BANK RAKYAT 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 BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and BANK RAKYAT IND, you can compare the effects of market volatilities on Amazon and BANK RAKYAT 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 BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and BANK RAKYAT.
Diversification Opportunities for Amazon and BANK RAKYAT
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and BANK is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of Amazon i.e., Amazon and BANK RAKYAT go up and down completely randomly.
Pair Corralation between Amazon and BANK RAKYAT
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.95 times more return on investment than BANK RAKYAT. However, Amazon Inc is 1.05 times less risky than BANK RAKYAT. It trades about 0.1 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.01 per unit of risk. If you would invest 8,497 in Amazon Inc on August 27, 2024 and sell it today you would earn a total of 10,459 from holding Amazon Inc or generate 123.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. BANK RAKYAT IND
Performance |
| Timeline |
| Amazon Inc |
| BANK RAKYAT IND |
Amazon and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and BANK RAKYAT
The main advantage of trading using opposite Amazon and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| Amazon vs. Big 5 Sporting | Amazon vs. Gold Road Resources | Amazon vs. Fukuyama Transporting Co | Amazon vs. Gaztransport Technigaz SA |
| BANK RAKYAT vs. SCOTT TECHNOLOGY | BANK RAKYAT vs. Casio Computer CoLtd | BANK RAKYAT vs. SHELF DRILLING LTD | BANK RAKYAT vs. Microchip Technology Incorporated |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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