Correlation Between Amazon and GALP ENERGIA

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

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

Diversification Opportunities for Amazon and GALP ENERGIA

0.74

Correlation Coefficient

Amazon  GALP ENERGIA

Poor diversification

The 3 months correlation between Amazon and GALP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and GALP ENERGIA B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALP ENERGIA B 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 GALP ENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALP ENERGIA B has no effect on the direction of Amazon i.e., Amazon and GALP ENERGIA go up and down completely randomly.

Pair Corralation between Amazon and GALP ENERGIA

Assuming the 90 days trading horizon Amazon Inc is expected to under-perform the GALP ENERGIA. In addition to that, Amazon is 1.09 times more volatile than GALP ENERGIA B . It trades about -0.2 of its total potential returns per unit of risk. GALP ENERGIA B is currently generating about -0.08 per unit of volatility. If you would invest  1,657  in GALP ENERGIA B on December 21, 2024 and sell it today you would lose (123.00) from holding GALP ENERGIA B or give up 7.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Amazon Inc  vs.  GALP ENERGIA B

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

GALP ENERGIA B

Risk-Adjusted Performance

Very Weak

Over the last 90 days GALP ENERGIA B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Amazon and GALP ENERGIA

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

The idea behind Amazon Inc and GALP ENERGIA B 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.