Correlation Between Amazon and Oriental Culture
Can any of the company-specific risk be diversified away by investing in both Amazon and Oriental Culture 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 Oriental Culture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Oriental Culture Holding, you can compare the effects of market volatilities on Amazon and Oriental Culture 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 Oriental Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Oriental Culture.
Diversification Opportunities for Amazon and Oriental Culture
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Oriental is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Oriental Culture Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Culture Holding 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 Oriental Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Culture Holding has no effect on the direction of Amazon i.e., Amazon and Oriental Culture go up and down completely randomly.
Pair Corralation between Amazon and Oriental Culture
Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Oriental Culture. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.97 times less risky than Oriental Culture. The stock trades about -0.28 of its potential returns per unit of risk. The Oriental Culture Holding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 117.00 in Oriental Culture Holding on December 1, 2024 and sell it today you would earn a total of 13.00 from holding Oriental Culture Holding or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Oriental Culture Holding
Performance |
| Timeline |
| Amazon Inc |
| Oriental Culture Holding |
Amazon and Oriental Culture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Oriental Culture
The main advantage of trading using opposite Amazon and Oriental Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Oriental Culture 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 Oriental Culture will offset losses from the drop in Oriental Culture's long position.The idea behind Amazon Inc and Oriental Culture Holding 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.| Oriental Culture vs. Hour Loop | Oriental Culture vs. Jowell Global | Oriental Culture vs. Qurate Retail Series | Oriental Culture vs. Emerge Commerce |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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