Correlation Between Amazon and BANK CIMB

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

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

Diversification Opportunities for Amazon and BANK CIMB

0.82

Correlation Coefficient

Amazon  BANK CIMB

Very poor diversification

The 3 months correlation between Amazon and BANK is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and BANK CIMB NIAGA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CIMB NIAGA 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 BANK CIMB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CIMB NIAGA has no effect on the direction of Amazon i.e., Amazon and BANK CIMB go up and down completely randomly.

Pair Corralation between Amazon and BANK CIMB

Assuming the 90 days trading horizon Amazon Inc is expected to under-perform the BANK CIMB. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.05 times less risky than BANK CIMB. The stock trades about -0.2 of its potential returns per unit of risk. The BANK CIMB NIAGA is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  9.35  in BANK CIMB NIAGA on December 21, 2024 and sell it today you would lose (1.00) from holding BANK CIMB NIAGA or give up 10.7% of portfolio value over 90 days.

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

Amazon Inc  vs.  BANK CIMB NIAGA

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 uncertain 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.

BANK CIMB NIAGA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK CIMB NIAGA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Amazon and BANK CIMB

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

The idea behind Amazon Inc and BANK CIMB NIAGA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.