Correlation Between ALTAIR RES and Amazon

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

Diversification Opportunities for ALTAIR RES and Amazon

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ALTAIR and Amazon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ALTAIR RES INC and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and ALTAIR RES 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 ALTAIR RES INC are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of ALTAIR RES i.e., ALTAIR RES and Amazon go up and down completely randomly.

Pair Corralation between ALTAIR RES and Amazon

Assuming the 90 days trading horizon ALTAIR RES INC is expected to generate 31.53 times more return on investment than Amazon. However, ALTAIR RES is 31.53 times more volatile than Amazon Inc. It trades about 0.08 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of risk. If you would invest  0.40  in ALTAIR RES INC on October 4, 2024 and sell it today you would lose (0.35) from holding ALTAIR RES INC or give up 87.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

ALTAIR RES INC  vs.  Amazon Inc

 Performance 
       Timeline  
ALTAIR RES INC 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days ALTAIR RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ALTAIR RES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Amazon Inc 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

ALTAIR RES and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ALTAIR RES and Amazon

The main advantage of trading using opposite ALTAIR RES and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTAIR RES position performs unexpectedly, Amazon 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 will offset losses from the drop in Amazon's long position.
The idea behind ALTAIR RES INC and Amazon Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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