Correlation Between Amazon and Linx SA
Can any of the company-specific risk be diversified away by investing in both Amazon and Linx SA 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 Linx SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Linx SA, you can compare the effects of market volatilities on Amazon and Linx SA 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 Linx SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Linx SA.
Diversification Opportunities for Amazon and Linx SA
Pay attention - limited upside
The 3 months correlation between Amazon and Linx is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Linx SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linx SA 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 Linx SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linx SA has no effect on the direction of Amazon i.e., Amazon and Linx SA go up and down completely randomly.
Pair Corralation between Amazon and Linx SA
If you would invest 16,102 in Amazon Inc on November 3, 2024 and sell it today you would earn a total of 7,666 from holding Amazon Inc or generate 47.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Amazon Inc vs. Linx SA
Performance |
| Timeline |
| Amazon Inc |
| Linx SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Linx SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Linx SA
The main advantage of trading using opposite Amazon and Linx SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Linx SA 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 Linx SA will offset losses from the drop in Linx SA's long position.The idea behind Amazon Inc and Linx SA 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.| Linx SA vs. Palantir Technologies | Linx SA vs. Nordon Indstrias Metalrgicas | Linx SA vs. Trane Technologies plc | Linx SA vs. DXC Technology |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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