Correlation Between Amazon and PT Bank
Can any of the company-specific risk be diversified away by investing in both Amazon and PT Bank 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 PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and PT Bank Central, you can compare the effects of market volatilities on Amazon and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and PT Bank.
Diversification Opportunities for Amazon and PT Bank
Pay attention - limited upside
The 3 months correlation between Amazon and PBCRF is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Central has no effect on the direction of Amazon i.e., Amazon and PT Bank go up and down completely randomly.
Pair Corralation between Amazon and PT Bank
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.31 times more return on investment than PT Bank. However, Amazon Inc is 3.2 times less risky than PT Bank. It trades about 0.05 of its potential returns per unit of risk. PT Bank Central is currently generating about -0.04 per unit of risk. If you would invest 22,329 in Amazon Inc on October 20, 2024 and sell it today you would earn a total of 265.00 from holding Amazon Inc or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. PT Bank Central
Performance |
| Timeline |
| Amazon Inc |
| PT Bank Central |
Amazon and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and PT Bank
The main advantage of trading using opposite Amazon and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.The idea behind Amazon Inc and PT Bank Central 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.| PT Bank vs. The Farmers Bank | PT Bank vs. CCSB Financial Corp | PT Bank vs. Bank of Utica | PT Bank vs. Delhi Bank Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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