Correlation Between Amazon and INDOSAT B
Can any of the company-specific risk be diversified away by investing in both Amazon and INDOSAT B 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 INDOSAT B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and INDOSAT B , you can compare the effects of market volatilities on Amazon and INDOSAT B 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 INDOSAT B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and INDOSAT B.
Diversification Opportunities for Amazon and INDOSAT B
Excellent diversification
The 3 months correlation between Amazon and INDOSAT is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and INDOSAT B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOSAT B 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 INDOSAT B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOSAT B has no effect on the direction of Amazon i.e., Amazon and INDOSAT B go up and down completely randomly.
Pair Corralation between Amazon and INDOSAT B
Assuming the 90 days trading horizon Amazon is expected to generate 2.14 times less return on investment than INDOSAT B. But when comparing it to its historical volatility, Amazon Inc is 3.33 times less risky than INDOSAT B. It trades about 0.23 of its potential returns per unit of risk. INDOSAT B is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 12.00 in INDOSAT B on September 15, 2024 and sell it today you would earn a total of 2.00 from holding INDOSAT B or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Amazon Inc vs. INDOSAT B
Performance |
| Timeline |
| Amazon Inc |
| INDOSAT B |
Amazon and INDOSAT B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and INDOSAT B
The main advantage of trading using opposite Amazon and INDOSAT B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, INDOSAT B 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 INDOSAT B will offset losses from the drop in INDOSAT B's long position.| Amazon vs. Altair Engineering | Amazon vs. Alaska Air Group | Amazon vs. Corsair Gaming | Amazon vs. Treasury Wine Estates |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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