Correlation Between Amazon and Next Meats
Can any of the company-specific risk be diversified away by investing in both Amazon and Next Meats 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 Next Meats into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Next Meats Holdings, you can compare the effects of market volatilities on Amazon and Next Meats 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 Next Meats. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Next Meats.
Diversification Opportunities for Amazon and Next Meats
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Next is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Next Meats Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Meats 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 Next Meats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Meats Holdings has no effect on the direction of Amazon i.e., Amazon and Next Meats go up and down completely randomly.
Pair Corralation between Amazon and Next Meats
Given the investment horizon of 90 days Amazon is expected to generate 7.59 times less return on investment than Next Meats. In addition to that, Amazon is 1.39 times more volatile than Next Meats Holdings. It trades about 0.02 of its total potential returns per unit of risk. Next Meats Holdings is currently generating about 0.23 per unit of volatility. If you would invest 0.22 in Next Meats Holdings on October 23, 2024 and sell it today you would earn a total of 0.01 from holding Next Meats Holdings or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Amazon Inc vs. Next Meats Holdings
Performance |
| Timeline |
| Amazon Inc |
| Next Meats Holdings |
Amazon and Next Meats Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Next Meats
The main advantage of trading using opposite Amazon and Next Meats positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Next Meats 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 Next Meats will offset losses from the drop in Next Meats' long position.The idea behind Amazon Inc and Next Meats 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.| Next Meats vs. C2E Energy | Next Meats vs. Tanke Biosciences | Next Meats vs. Supurva Healthcare Group | Next Meats vs. Kasten Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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