Correlation Between Amazon and LINE
Can any of the company-specific risk be diversified away by investing in both Amazon and LINE 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 LINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and LINE Corporation, you can compare the effects of market volatilities on Amazon and LINE 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 LINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and LINE.
Diversification Opportunities for Amazon and LINE
Pay attention - limited upside
The 3 months correlation between Amazon and LINE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and LINE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINE 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 LINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINE has no effect on the direction of Amazon i.e., Amazon and LINE go up and down completely randomly.
Pair Corralation between Amazon and LINE
If you would invest 18,128 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 2,661 from holding Amazon Inc or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Amazon Inc vs. LINE Corp.
Performance |
| Timeline |
| Amazon Inc |
| LINE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and LINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and LINE
The main advantage of trading using opposite Amazon and LINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, LINE 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 LINE will offset losses from the drop in LINE's long position.The idea behind Amazon Inc and LINE Corporation 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.| LINE vs. WEBTOON Entertainment Common | LINE vs. Constellation Brands Class | LINE vs. Scandinavian Tobacco Group | LINE vs. Peoples Educational Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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