Correlation Between Amazon CDR and Gratomic

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

By analyzing existing cross correlation between Amazon CDR and Gratomic, you can compare the effects of market volatilities on Amazon CDR and Gratomic 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 CDR with a short position of Gratomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Gratomic.

Diversification Opportunities for Amazon CDR and Gratomic

-0.3

Correlation Coefficient

Amazon CDR  Gratomic

Very good diversification

The 3 months correlation between Amazon and Gratomic is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Gratomic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gratomic and Amazon CDR 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 CDR are associated (or correlated) with Gratomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gratomic has no effect on the direction of Amazon CDR i.e., Amazon CDR and Gratomic go up and down completely randomly.

Pair Corralation between Amazon CDR and Gratomic

Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.2 times more return on investment than Gratomic. However, Amazon CDR is 4.89 times less risky than Gratomic. It trades about 0.01 of its potential returns per unit of risk. Gratomic is currently generating about -0.02 per unit of risk. If you would invest  2,508  in Amazon CDR on December 1, 2024 and sell it today you would earn a total of  8.00  from holding Amazon CDR or generate 0.32% return on investment over 90 days.

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

Amazon CDR  vs.  Gratomic

Amazon CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Amazon CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Gratomic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gratomic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Amazon CDR and Gratomic

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

The idea behind Amazon CDR and Gratomic 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.