Correlation Between Amazon and YTLBerhad
Can any of the company-specific risk be diversified away by investing in both Amazon and YTLBerhad 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 YTLBerhad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and YTL Berhad, you can compare the effects of market volatilities on Amazon and YTLBerhad 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 YTLBerhad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and YTLBerhad.
Diversification Opportunities for Amazon and YTLBerhad
Pay attention - limited upside
The 3 months correlation between Amazon and YTLBerhad is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and YTL Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YTL Berhad 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 YTLBerhad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YTL Berhad has no effect on the direction of Amazon i.e., Amazon and YTLBerhad go up and down completely randomly.
Pair Corralation between Amazon and YTLBerhad
Given the investment horizon of 90 days Amazon is expected to generate 1.17 times less return on investment than YTLBerhad. But when comparing it to its historical volatility, Amazon Inc is 1.09 times less risky than YTLBerhad. It trades about 0.2 of its potential returns per unit of risk. YTL Berhad is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 41.00 in YTL Berhad on August 29, 2024 and sell it today you would earn a total of 5.00 from holding YTL Berhad or generate 12.2% 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. YTL Berhad
Performance |
| Timeline |
| Amazon Inc |
| YTL Berhad |
Amazon and YTLBerhad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and YTLBerhad
The main advantage of trading using opposite Amazon and YTLBerhad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, YTLBerhad 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 YTLBerhad will offset losses from the drop in YTLBerhad's long position.The idea behind Amazon Inc and YTL Berhad 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.| YTLBerhad vs. Apple Inc | YTLBerhad vs. Microsoft | YTLBerhad vs. Alphabet Inc Class C | YTLBerhad vs. Meta Platforms |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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