Correlation Between Amazon and Kalo Gold
Can any of the company-specific risk be diversified away by investing in both Amazon and Kalo Gold 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 Kalo Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Kalo Gold Holdings, you can compare the effects of market volatilities on Amazon and Kalo Gold 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 Kalo Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Kalo Gold.
Diversification Opportunities for Amazon and Kalo Gold
Very weak diversification
The 3 months correlation between Amazon and Kalo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Kalo Gold Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalo Gold Holdings 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 Kalo Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalo Gold Holdings has no effect on the direction of Amazon i.e., Amazon and Kalo Gold go up and down completely randomly.
Pair Corralation between Amazon and Kalo Gold
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.19 times more return on investment than Kalo Gold. However, Amazon Inc is 5.21 times less risky than Kalo Gold. It trades about 0.22 of its potential returns per unit of risk. Kalo Gold Holdings is currently generating about -0.08 per unit of risk. If you would invest 20,684 in Amazon Inc on September 12, 2024 and sell it today you would earn a total of 1,820 from holding Amazon Inc or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Kalo Gold Holdings
Performance |
| Timeline |
| Amazon Inc |
| Kalo Gold Holdings |
Amazon and Kalo Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Kalo Gold
The main advantage of trading using opposite Amazon and Kalo Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Kalo Gold 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 Kalo Gold will offset losses from the drop in Kalo Gold's long position.The idea behind Amazon Inc and Kalo Gold 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.| Kalo Gold vs. Big Ridge Gold | Kalo Gold vs. Radisson Mining Resources | Kalo Gold vs. Roscan Gold Corp | Kalo Gold vs. Independence Gold Corp |
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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