Correlation Between Amazon and Ryman Healthcare

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

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

Diversification Opportunities for Amazon and Ryman Healthcare

0.75

Correlation Coefficient

Amazon  Ryman Healthcare

Poor diversification

The 3 months correlation between Amazon and Ryman is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Ryman Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Healthcare 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 Ryman Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryman Healthcare has no effect on the direction of Amazon i.e., Amazon and Ryman Healthcare go up and down completely randomly.

Pair Corralation between Amazon and Ryman Healthcare

Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.41 times more return on investment than Ryman Healthcare. However, Amazon Inc is 2.45 times less risky than Ryman Healthcare. It trades about -0.15 of its potential returns per unit of risk. Ryman Healthcare Limited is currently generating about -0.14 per unit of risk. If you would invest  21,720  in Amazon Inc on December 23, 2024 and sell it today you would lose (3,660) from holding Amazon Inc or give up 16.85% 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.  Ryman Healthcare Limited

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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ryman Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryman Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Amazon and Ryman Healthcare

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

The idea behind Amazon Inc and Ryman Healthcare Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.