Correlation Between Amazon CDR and Manganese

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

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

Diversification Opportunities for Amazon CDR and Manganese

0.33

Correlation Coefficient

Amazon CDR  Manganese

Weak diversification

The 3 months correlation between Amazon and Manganese is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Manganese X Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manganese X Energy 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 Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manganese X Energy has no effect on the direction of Amazon CDR i.e., Amazon CDR and Manganese go up and down completely randomly.

Pair Corralation between Amazon CDR and Manganese

Assuming the 90 days trading horizon Amazon CDR is expected to generate 93.41 times less return on investment than Manganese. But when comparing it to its historical volatility, Amazon CDR is 7.15 times less risky than Manganese. It trades about 0.01 of its potential returns per unit of risk. Manganese X Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Manganese X Energy on December 1, 2024 and sell it today you would earn a total of  4.00  from holding Manganese X Energy or generate 100.0% return on investment over 90 days.

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

Amazon CDR  vs.  Manganese X Energy

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.

Manganese X Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manganese X Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Manganese showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon CDR and Manganese

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

The idea behind Amazon CDR and Manganese X Energy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.