Correlation Between Amazon and GAMING FAC

Can any of the company-specific risk be diversified away by investing in both Amazon and GAMING FAC 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 GAMING FAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon Inc and GAMING FAC SA, you can compare the effects of market volatilities on Amazon and GAMING FAC 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 GAMING FAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and GAMING FAC.

Diversification Opportunities for Amazon and GAMING FAC

-0.52

Correlation Coefficient

Amazon  GAMING FAC

Excellent diversification

The 3 months correlation between Amazon and GAMING is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and GAMING FAC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMING FAC SA 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 GAMING FAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMING FAC SA has no effect on the direction of Amazon i.e., Amazon and GAMING FAC go up and down completely randomly.

Pair Corralation between Amazon and GAMING FAC

Assuming the 90 days trading horizon Amazon is expected to generate 1.82 times less return on investment than GAMING FAC. But when comparing it to its historical volatility, Amazon Inc is 2.39 times less risky than GAMING FAC. It trades about 0.24 of its potential returns per unit of risk. GAMING FAC SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  154.00  in GAMING FAC SA on October 25, 2024 and sell it today you would earn a total of  14.00  from holding GAMING FAC SA or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Amazon Inc  vs.  GAMING FAC SA

Amazon Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

GAMING FAC SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GAMING FAC SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GAMING FAC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Amazon and GAMING FAC

The main advantage of trading using opposite Amazon and GAMING FAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, GAMING FAC 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 GAMING FAC will offset losses from the drop in GAMING FAC's long position.

The idea behind Amazon Inc and GAMING FAC SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.