Correlation Between Amazon and Realites
Can any of the company-specific risk be diversified away by investing in both Amazon and Realites 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 Realites into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Realites, you can compare the effects of market volatilities on Amazon and Realites 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 Realites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Realites.
Diversification Opportunities for Amazon and Realites
Excellent diversification
The 3 months correlation between Amazon and Realites is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Realites in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realites 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 Realites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realites has no effect on the direction of Amazon i.e., Amazon and Realites go up and down completely randomly.
Pair Corralation between Amazon and Realites
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.22 times more return on investment than Realites. However, Amazon Inc is 4.63 times less risky than Realites. It trades about 0.07 of its potential returns per unit of risk. Realites is currently generating about -0.13 per unit of risk. If you would invest 18,128 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 2,661 from holding Amazon Inc or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
Amazon Inc vs. Realites
Performance |
| Timeline |
| Amazon Inc |
| Realites |
Amazon and Realites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Realites
The main advantage of trading using opposite Amazon and Realites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Realites 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 Realites will offset losses from the drop in Realites' long position.The idea behind Amazon Inc and Realites 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.| Realites vs. CBO Territoria SA | Realites vs. Bassac | Realites vs. Moulinvest | Realites vs. Piscines Desjoyaux SA |
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 CEOs Directory module to screen CEOs from public companies around the world.
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