Correlation Between Amazon and Promotora
Can any of the company-specific risk be diversified away by investing in both Amazon and Promotora 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 Promotora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Promotora de Informaciones, you can compare the effects of market volatilities on Amazon and Promotora 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 Promotora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Promotora.
Diversification Opportunities for Amazon and Promotora
Modest diversification
The 3 months correlation between Amazon and Promotora is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Promotora de Informaciones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promotora de Informa 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 Promotora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promotora de Informa has no effect on the direction of Amazon i.e., Amazon and Promotora go up and down completely randomly.
Pair Corralation between Amazon and Promotora
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.84 times more return on investment than Promotora. However, Amazon Inc is 1.2 times less risky than Promotora. It trades about 0.09 of its potential returns per unit of risk. Promotora de Informaciones is currently generating about 0.0 per unit of risk. If you would invest 12,578 in Amazon Inc on September 12, 2024 and sell it today you would earn a total of 9,926 from holding Amazon Inc or generate 78.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.9% |
| Values | Daily Returns |
Amazon Inc vs. Promotora de Informaciones
Performance |
| Timeline |
| Amazon Inc |
| Promotora de Informa |
Amazon and Promotora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Promotora
The main advantage of trading using opposite Amazon and Promotora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Promotora 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 Promotora will offset losses from the drop in Promotora's long position.The idea behind Amazon Inc and Promotora de Informaciones 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.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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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