Correlation Between Exco Technologies and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Exco Technologies and Amazon CDR 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 Exco Technologies and Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exco Technologies Limited and Amazon CDR, you can compare the effects of market volatilities on Exco Technologies and Amazon CDR 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 Exco Technologies with a short position of Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exco Technologies and Amazon CDR.
Diversification Opportunities for Exco Technologies and Amazon CDR
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Exco and Amazon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Exco Technologies 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 Exco Technologies Limited are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Exco Technologies i.e., Exco Technologies and Amazon CDR go up and down completely randomly.
Pair Corralation between Exco Technologies and Amazon CDR
Assuming the 90 days trading horizon Exco Technologies Limited is expected to under-perform the Amazon CDR. But the stock apears to be less risky and, when comparing its historical volatility, Exco Technologies Limited is 1.84 times less risky than Amazon CDR. The stock trades about -0.33 of its potential returns per unit of risk. The Amazon CDR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,466 in Amazon CDR on September 12, 2024 and sell it today you would earn a total of 214.00 from holding Amazon CDR or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exco Technologies Limited vs. Amazon CDR
Performance |
| Timeline |
| Exco Technologies |
| Amazon CDR |
Exco Technologies and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exco Technologies and Amazon CDR
The main advantage of trading using opposite Exco Technologies and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exco Technologies position performs unexpectedly, Amazon CDR 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 Amazon CDR will offset losses from the drop in Amazon CDR's long position.| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
| Amazon CDR vs. Data Communications Management | Amazon CDR vs. Marimaca Copper Corp | Amazon CDR vs. Rogers Communications | Amazon CDR vs. Maple Leaf Foods |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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