Correlation Between Amazon and Omnia Holdings
Can any of the company-specific risk be diversified away by investing in both Amazon and Omnia Holdings 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 Omnia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Omnia Holdings Limited, you can compare the effects of market volatilities on Amazon and Omnia Holdings 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 Omnia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Omnia Holdings.
Diversification Opportunities for Amazon and Omnia Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and Omnia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Omnia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia 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 Omnia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Holdings has no effect on the direction of Amazon i.e., Amazon and Omnia Holdings go up and down completely randomly.
Pair Corralation between Amazon and Omnia Holdings
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.54 times more return on investment than Omnia Holdings. However, Amazon is 1.54 times more volatile than Omnia Holdings Limited. It trades about 0.15 of its potential returns per unit of risk. Omnia Holdings Limited is currently generating about 0.19 per unit of risk. If you would invest 17,625 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 3,164 from holding Amazon Inc or generate 17.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Omnia Holdings Limited
Performance |
| Timeline |
| Amazon Inc |
| Omnia Holdings |
Amazon and Omnia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Omnia Holdings
The main advantage of trading using opposite Amazon and Omnia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Omnia Holdings 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 Omnia Holdings will offset losses from the drop in Omnia Holdings' long position.The idea behind Amazon Inc and Omnia Holdings Limited 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.| Omnia Holdings vs. Afine Investments | Omnia Holdings vs. Capitec Bank Holdings | Omnia Holdings vs. Safari Investments RSA | Omnia Holdings vs. Astoria Investments |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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