Correlation Between Amazon CDR and Maple Peak

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Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Maple Peak 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 Maple Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Maple Peak Investments, you can compare the effects of market volatilities on Amazon CDR and Maple Peak 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 Maple Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Maple Peak.

Diversification Opportunities for Amazon CDR and Maple Peak

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and Maple is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Maple Peak Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Peak Investments 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 Maple Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Peak Investments has no effect on the direction of Amazon CDR i.e., Amazon CDR and Maple Peak go up and down completely randomly.

Pair Corralation between Amazon CDR and Maple Peak

Assuming the 90 days trading horizon Amazon CDR is expected to generate 3.68 times less return on investment than Maple Peak. But when comparing it to its historical volatility, Amazon CDR is 7.43 times less risky than Maple Peak. It trades about 0.1 of its potential returns per unit of risk. Maple Peak Investments is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Maple Peak Investments on September 6, 2024 and sell it today you would earn a total of  0.00  from holding Maple Peak Investments or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.63%
ValuesDaily Returns

Amazon CDR  vs.  Maple Peak Investments

 Performance 
       Timeline  
Amazon CDR 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.
Maple Peak Investments 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Maple Peak Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Maple Peak is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Amazon CDR and Maple Peak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon CDR and Maple Peak

The main advantage of trading using opposite Amazon CDR and Maple Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Maple Peak 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 Maple Peak will offset losses from the drop in Maple Peak's long position.
The idea behind Amazon CDR and Maple Peak Investments 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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