Correlation Between Amazon and PHINMA Corp
Can any of the company-specific risk be diversified away by investing in both Amazon and PHINMA Corp 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 PHINMA Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and PHINMA Corp, you can compare the effects of market volatilities on Amazon and PHINMA Corp 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 PHINMA Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and PHINMA Corp.
Diversification Opportunities for Amazon and PHINMA Corp
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and PHINMA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and PHINMA Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINMA Corp 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 PHINMA Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINMA Corp has no effect on the direction of Amazon i.e., Amazon and PHINMA Corp go up and down completely randomly.
Pair Corralation between Amazon and PHINMA Corp
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.78 times more return on investment than PHINMA Corp. However, Amazon Inc is 1.29 times less risky than PHINMA Corp. It trades about 0.1 of its potential returns per unit of risk. PHINMA Corp is currently generating about 0.02 per unit of risk. If you would invest 9,158 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 11,913 from holding Amazon Inc or generate 130.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
Amazon Inc vs. PHINMA Corp
Performance |
| Timeline |
| Amazon Inc |
| PHINMA Corp |
Amazon and PHINMA Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and PHINMA Corp
The main advantage of trading using opposite Amazon and PHINMA Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, PHINMA Corp 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 PHINMA Corp will offset losses from the drop in PHINMA Corp's long position.The idea behind Amazon Inc and PHINMA Corp 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.| PHINMA Corp vs. SM Investments Corp | PHINMA Corp vs. San Miguel Pure | PHINMA Corp vs. Ayala Corp | PHINMA Corp vs. Ayala Land |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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