Correlation Between AMAZON and Alignment Healthcare

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Can any of the company-specific risk be diversified away by investing in both AMAZON and Alignment Healthcare 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 Alignment Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMAZON INC 425 and Alignment Healthcare LLC, you can compare the effects of market volatilities on AMAZON and Alignment Healthcare 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 Alignment Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMAZON and Alignment Healthcare.

Diversification Opportunities for AMAZON and Alignment Healthcare

AMAZONAlignmentDiversified AwayAMAZONAlignmentDiversified Away100%
-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between AMAZON and Alignment is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AMAZON INC 425 and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC 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 425 are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of AMAZON i.e., AMAZON and Alignment Healthcare go up and down completely randomly.

Pair Corralation between AMAZON and Alignment Healthcare

Assuming the 90 days trading horizon AMAZON INC 425 is expected to under-perform the Alignment Healthcare. But the bond apears to be less risky and, when comparing its historical volatility, AMAZON INC 425 is 3.59 times less risky than Alignment Healthcare. The bond trades about 0.0 of its potential returns per unit of risk. The Alignment Healthcare LLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  688.00  in Alignment Healthcare LLC on November 27, 2024 and sell it today you would earn a total of  675.00  from holding Alignment Healthcare LLC or generate 98.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AMAZON INC 425  vs.  Alignment Healthcare LLC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.15023135BM7 ALHC
       Timeline  
AMAZON INC 425 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days AMAZON INC 425 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMAZON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8081828384858687
Alignment Healthcare LLC 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, Alignment Healthcare may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1112131415

AMAZON and Alignment Healthcare Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.29-0.95-0.61-0.27-0.01630.210.550.891.231.57 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15023135BM7 ALHC
       Returns  

Pair Trading with AMAZON and Alignment Healthcare

The main advantage of trading using opposite AMAZON and Alignment Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMAZON position performs unexpectedly, Alignment Healthcare 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 Alignment Healthcare will offset losses from the drop in Alignment Healthcare's long position.
The idea behind AMAZON INC 425 and Alignment Healthcare LLC 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.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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