Correlation Between Amazon and Coelacanth Energy
Can any of the company-specific risk be diversified away by investing in both Amazon and Coelacanth Energy 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 Coelacanth Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Coelacanth Energy, you can compare the effects of market volatilities on Amazon and Coelacanth Energy 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 Coelacanth Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Coelacanth Energy.
Diversification Opportunities for Amazon and Coelacanth Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amazon and Coelacanth is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Coelacanth Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coelacanth Energy 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 Coelacanth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coelacanth Energy has no effect on the direction of Amazon i.e., Amazon and Coelacanth Energy go up and down completely randomly.
Pair Corralation between Amazon and Coelacanth Energy
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.49 times more return on investment than Coelacanth Energy. However, Amazon Inc is 2.05 times less risky than Coelacanth Energy. It trades about 0.1 of its potential returns per unit of risk. Coelacanth Energy is currently generating about 0.02 per unit of risk. If you would invest 9,392 in Amazon Inc on November 27, 2024 and sell it today you would earn a total of 11,879 from holding Amazon Inc or generate 126.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Amazon Inc vs. Coelacanth Energy
Performance |
| Timeline |
| Amazon Inc |
| Coelacanth Energy |
Amazon and Coelacanth Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Coelacanth Energy
The main advantage of trading using opposite Amazon and Coelacanth Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Coelacanth Energy 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 Coelacanth Energy will offset losses from the drop in Coelacanth Energy's long position.The idea behind Amazon Inc and Coelacanth Energy 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.| Coelacanth Energy vs. Kelt Exploration | Coelacanth Energy vs. Hemisphere Energy | Coelacanth Energy vs. Spartan Delta Corp | Coelacanth Energy vs. Headwater Exploration |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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