Correlation Between Amazon CDR and Quisitive Technology

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

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

Diversification Opportunities for Amazon CDR and Quisitive Technology

-0.44

Correlation Coefficient

Amazon CDR  Quisitive Technology

Very good diversification

The 3 months correlation between Amazon and Quisitive is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Quisitive Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quisitive Technology 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 Quisitive Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quisitive Technology has no effect on the direction of Amazon CDR i.e., Amazon CDR and Quisitive Technology go up and down completely randomly.

Pair Corralation between Amazon CDR and Quisitive Technology

Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.45 times more return on investment than Quisitive Technology. However, Amazon CDR is 2.21 times less risky than Quisitive Technology. It trades about 0.09 of its potential returns per unit of risk. Quisitive Technology Solutions is currently generating about 0.03 per unit of risk. If you would invest  1,632  in Amazon CDR on September 12, 2024 and sell it today you would earn a total of  1,048  from holding Amazon CDR or generate 64.22% return on investment over 90 days.

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

Amazon CDR  vs.  Quisitive Technology Solutions

Amazon CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Quisitive Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quisitive Technology Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Quisitive Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Amazon CDR and Quisitive Technology

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

The idea behind Amazon CDR and Quisitive Technology Solutions 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.