Correlation Between Amazon CDR and South Pacific
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and South Pacific 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 CDR and South Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and South Pacific Metals, you can compare the effects of market volatilities on Amazon CDR and South Pacific 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 CDR with a short position of South Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and South Pacific.
Diversification Opportunities for Amazon CDR and South Pacific
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and South is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals and Amazon CDR 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 CDR are associated (or correlated) with South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of Amazon CDR i.e., Amazon CDR and South Pacific go up and down completely randomly.
Pair Corralation between Amazon CDR and South Pacific
Assuming the 90 days trading horizon Amazon CDR is expected to generate 8.78 times less return on investment than South Pacific. But when comparing it to its historical volatility, Amazon CDR is 1.68 times less risky than South Pacific. It trades about 0.09 of its potential returns per unit of risk. South Pacific Metals is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 45.00 in South Pacific Metals on October 25, 2024 and sell it today you would earn a total of 12.00 from holding South Pacific Metals or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. South Pacific Metals
Performance |
| Timeline |
| Amazon CDR |
| South Pacific Metals |
Amazon CDR and South Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and South Pacific
The main advantage of trading using opposite Amazon CDR and South Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, South Pacific 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 South Pacific will offset losses from the drop in South Pacific's long position.| Amazon CDR vs. Global Crossing Airlines | Amazon CDR vs. CVW CleanTech | Amazon CDR vs. Manulife Financial Corp | Amazon CDR vs. XXIX Metal Corp |
| South Pacific vs. Brookfield Investments | South Pacific vs. Bausch Health Companies | South Pacific vs. Nova Leap Health | South Pacific vs. Nano One Materials |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |