Correlation Between Amazon and Mundus
Can any of the company-specific risk be diversified away by investing in both Amazon and Mundus 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 Mundus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Mundus Group, you can compare the effects of market volatilities on Amazon and Mundus 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 Mundus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Mundus.
Diversification Opportunities for Amazon and Mundus
Excellent diversification
The 3 months correlation between Amazon and Mundus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Mundus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundus 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 Mundus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundus Group has no effect on the direction of Amazon i.e., Amazon and Mundus go up and down completely randomly.
Pair Corralation between Amazon and Mundus
Given the investment horizon of 90 days Amazon is expected to generate 4.15 times less return on investment than Mundus. But when comparing it to its historical volatility, Amazon Inc is 7.3 times less risky than Mundus. It trades about 0.08 of its potential returns per unit of risk. Mundus Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.14 in Mundus Group on September 2, 2024 and sell it today you would lose (0.06) from holding Mundus Group or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Amazon Inc vs. Mundus Group
Performance |
| Timeline |
| Amazon Inc |
| Mundus Group |
Amazon and Mundus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Mundus
The main advantage of trading using opposite Amazon and Mundus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Mundus 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 Mundus will offset losses from the drop in Mundus' long position.The idea behind Amazon Inc and Mundus 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.| Mundus vs. Atlas Technology Grp | Mundus vs. TransAKT | Mundus vs. China Health Management | Mundus vs. American Leisure 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |