Correlation Between Amazon and DAEDUCK ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Amazon and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and DAEDUCK ELECTRONICS CoLtd, you can compare the effects of market volatilities on Amazon and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and DAEDUCK ELECTRONICS.
Diversification Opportunities for Amazon and DAEDUCK ELECTRONICS
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and DAEDUCK is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and DAEDUCK ELECTRONICS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEDUCK ELECTRONICS CoLtd 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 DAEDUCK ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEDUCK ELECTRONICS CoLtd has no effect on the direction of Amazon i.e., Amazon and DAEDUCK ELECTRONICS go up and down completely randomly.
Pair Corralation between Amazon and DAEDUCK ELECTRONICS
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.2 times more return on investment than DAEDUCK ELECTRONICS. However, Amazon is 1.2 times more volatile than DAEDUCK ELECTRONICS CoLtd. It trades about 0.1 of its potential returns per unit of risk. DAEDUCK ELECTRONICS CoLtd is currently generating about -0.06 per unit of risk. If you would invest 13,468 in Amazon Inc on September 12, 2024 and sell it today you would earn a total of 9,036 from holding Amazon Inc or generate 67.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.37% |
| Values | Daily Returns |
Amazon Inc vs. DAEDUCK ELECTRONICS CoLtd
Performance |
| Timeline |
| Amazon Inc |
| DAEDUCK ELECTRONICS CoLtd |
Amazon and DAEDUCK ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and DAEDUCK ELECTRONICS
The main advantage of trading using opposite Amazon and DAEDUCK ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS will offset losses from the drop in DAEDUCK ELECTRONICS's long position.The idea behind Amazon Inc and DAEDUCK ELECTRONICS CoLtd 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.| DAEDUCK ELECTRONICS vs. Korea Computer | DAEDUCK ELECTRONICS vs. Duksan Hi Metal | DAEDUCK ELECTRONICS vs. LG Display Co | DAEDUCK ELECTRONICS vs. Shinsegae Information Communication |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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