Correlation Between Amazon and Kerry Logistics
Can any of the company-specific risk be diversified away by investing in both Amazon and Kerry Logistics 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 Kerry Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Kerry Logistics Network, you can compare the effects of market volatilities on Amazon and Kerry Logistics 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 Kerry Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Kerry Logistics.
Diversification Opportunities for Amazon and Kerry Logistics
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Kerry is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Kerry Logistics Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Logistics Network 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 Kerry Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Logistics Network has no effect on the direction of Amazon i.e., Amazon and Kerry Logistics go up and down completely randomly.
Pair Corralation between Amazon and Kerry Logistics
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.65 times more return on investment than Kerry Logistics. However, Amazon Inc is 1.54 times less risky than Kerry Logistics. It trades about 0.04 of its potential returns per unit of risk. Kerry Logistics Network is currently generating about -0.13 per unit of risk. If you would invest 20,574 in Amazon Inc on November 27, 2024 and sell it today you would earn a total of 697.00 from holding Amazon Inc or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.06% |
| Values | Daily Returns |
Amazon Inc vs. Kerry Logistics Network
Performance |
| Timeline |
| Amazon Inc |
| Kerry Logistics Network |
Amazon and Kerry Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Kerry Logistics
The main advantage of trading using opposite Amazon and Kerry Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Kerry Logistics 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 Kerry Logistics will offset losses from the drop in Kerry Logistics' long position.The idea behind Amazon Inc and Kerry Logistics Network 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.| Kerry Logistics vs. Alto Ingredients | Kerry Logistics vs. The Mosaic | Kerry Logistics vs. Digi International | Kerry Logistics vs. Space Communication |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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