Correlation Between Amazon and Apollo Strategic

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

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

Diversification Opportunities for Amazon and Apollo Strategic

0.79

Correlation Coefficient

Amazon  Apollo Strategic

Poor diversification

The 3 months correlation between Amazon and Apollo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Apollo Strategic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Strategic Growth 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 Apollo Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Strategic Growth has no effect on the direction of Amazon i.e., Amazon and Apollo Strategic go up and down completely randomly.

Pair Corralation between Amazon and Apollo Strategic

Given the investment horizon of 90 days Amazon Inc is expected to generate 8.53 times more return on investment than Apollo Strategic. However, Amazon is 8.53 times more volatile than Apollo Strategic Growth. It trades about 0.11 of its potential returns per unit of risk. Apollo Strategic Growth is currently generating about 0.11 per unit of risk. If you would invest  8,736  in Amazon Inc on September 28, 2024 and sell it today you would earn a total of  13,454  from holding Amazon Inc or generate 154.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	27.42%
Values	Daily Returns

Amazon Inc  vs.  Apollo Strategic Growth

Amazon Inc

Risk-Adjusted Performance

14 of 100

Good

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

Apollo Strategic Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Strategic Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Apollo Strategic is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Apollo Strategic

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

The idea behind Amazon Inc and Apollo Strategic Growth 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.