Correlation Between Amazon and CK Infrastructure
Can any of the company-specific risk be diversified away by investing in both Amazon and CK Infrastructure 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 CK Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and CK Infrastructure Holdings, you can compare the effects of market volatilities on Amazon and CK Infrastructure 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 CK Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and CK Infrastructure.
Diversification Opportunities for Amazon and CK Infrastructure
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Amazon and CHH is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and CK Infrastructure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Infrastructure 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 CK Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Infrastructure has no effect on the direction of Amazon i.e., Amazon and CK Infrastructure go up and down completely randomly.
Pair Corralation between Amazon and CK Infrastructure
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.63 times more return on investment than CK Infrastructure. However, Amazon Inc is 1.59 times less risky than CK Infrastructure. It trades about 0.18 of its potential returns per unit of risk. CK Infrastructure Holdings is currently generating about 0.02 per unit of risk. If you would invest 18,700 in Amazon Inc on September 12, 2024 and sell it today you would earn a total of 3,804 from holding Amazon Inc or generate 20.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Amazon Inc vs. CK Infrastructure Holdings
Performance |
| Timeline |
| Amazon Inc |
| CK Infrastructure |
Amazon and CK Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and CK Infrastructure
The main advantage of trading using opposite Amazon and CK Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, CK Infrastructure 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 CK Infrastructure will offset losses from the drop in CK Infrastructure's long position.The idea behind Amazon Inc and CK Infrastructure Holdings 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.| CK Infrastructure vs. ANGLER GAMING PLC | CK Infrastructure vs. Media and Games | CK Infrastructure vs. EAST SIDE GAMES | CK Infrastructure vs. Zijin Mining Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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