Correlation Between Amazon and Strer SE

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

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

Diversification Opportunities for Amazon and Strer SE

-0.87

Correlation Coefficient

Amazon  Strer SE

Pay attention - limited upside

The 3 months correlation between Amazon and Strer is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Strer SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strer SE 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 Strer SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strer SE has no effect on the direction of Amazon i.e., Amazon and Strer SE go up and down completely randomly.

Pair Corralation between Amazon and Strer SE

Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.89 times more return on investment than Strer SE. However, Amazon Inc is 1.13 times less risky than Strer SE. It trades about 0.47 of its potential returns per unit of risk. Strer SE Co is currently generating about -0.02 per unit of risk. If you would invest  19,000  in Amazon Inc on September 25, 2024 and sell it today you would earn a total of  2,720  from holding Amazon Inc or generate 14.32% return on investment over 90 days.

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

Amazon Inc  vs.  Strer SE Co

Amazon Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Amazon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Strer SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strer SE Co 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Amazon and Strer SE

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

The idea behind Amazon Inc and Strer SE Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.