Correlation Between Amazon and AJ LUCAS
Can any of the company-specific risk be diversified away by investing in both Amazon and AJ LUCAS 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 AJ LUCAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and AJ LUCAS GROUP, you can compare the effects of market volatilities on Amazon and AJ LUCAS 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 AJ LUCAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and AJ LUCAS.
Diversification Opportunities for Amazon and AJ LUCAS
Very good diversification
The 3 months correlation between Amazon and FW9 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP 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 AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of Amazon i.e., Amazon and AJ LUCAS go up and down completely randomly.
Pair Corralation between Amazon and AJ LUCAS
Given the investment horizon of 90 days Amazon is expected to generate 10.64 times less return on investment than AJ LUCAS. But when comparing it to its historical volatility, Amazon Inc is 13.42 times less risky than AJ LUCAS. It trades about 0.08 of its potential returns per unit of risk. AJ LUCAS GROUP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.60 in AJ LUCAS GROUP on September 4, 2024 and sell it today you would lose (0.55) from holding AJ LUCAS GROUP or give up 91.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.16% |
| Values | Daily Returns |
Amazon Inc vs. AJ LUCAS GROUP
Performance |
| Timeline |
| Amazon Inc |
| AJ LUCAS GROUP |
Amazon and AJ LUCAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and AJ LUCAS
The main advantage of trading using opposite Amazon and AJ LUCAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, AJ LUCAS 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 AJ LUCAS will offset losses from the drop in AJ LUCAS's long position.The idea behind Amazon Inc and AJ LUCAS GROUP 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.| AJ LUCAS vs. Insurance Australia Group | AJ LUCAS vs. Games Workshop Group | AJ LUCAS vs. Scientific Games | AJ LUCAS vs. REVO INSURANCE SPA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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