Correlation Between Amazon and AIICO INSURANCE

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

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

Diversification Opportunities for Amazon and AIICO INSURANCE

0.45

Correlation Coefficient

Amazon  AIICO INSURANCE

Very weak diversification

The 3 months correlation between Amazon and AIICO is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and AIICO INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIICO INSURANCE PLC 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 AIICO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIICO INSURANCE PLC has no effect on the direction of Amazon i.e., Amazon and AIICO INSURANCE go up and down completely randomly.

Pair Corralation between Amazon and AIICO INSURANCE

Given the investment horizon of 90 days Amazon is expected to generate 24.08 times less return on investment than AIICO INSURANCE. But when comparing it to its historical volatility, Amazon Inc is 2.51 times less risky than AIICO INSURANCE. It trades about 0.02 of its potential returns per unit of risk. AIICO INSURANCE PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  122.00  in AIICO INSURANCE PLC on December 2, 2024 and sell it today you would earn a total of  48.00  from holding AIICO INSURANCE PLC or generate 39.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Amazon Inc  vs.  AIICO INSURANCE PLC

Amazon Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amazon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

AIICO INSURANCE PLC

Risk-Adjusted Performance

Good

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

Pair Trading with Amazon and AIICO INSURANCE

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

The idea behind Amazon Inc and AIICO INSURANCE PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.