Correlation Between Amazon and Atico Mining

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

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

Diversification Opportunities for Amazon and Atico Mining

-0.41

Correlation Coefficient

Amazon  Atico Mining

Very good diversification

The 3 months correlation between Amazon and Atico is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Atico Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atico Mining 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 Atico Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atico Mining has no effect on the direction of Amazon i.e., Amazon and Atico Mining go up and down completely randomly.

Pair Corralation between Amazon and Atico Mining

Given the investment horizon of 90 days Amazon is expected to generate 1.87 times less return on investment than Atico Mining. But when comparing it to its historical volatility, Amazon Inc is 3.86 times less risky than Atico Mining. It trades about 0.1 of its potential returns per unit of risk. Atico Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7.70  in Atico Mining on September 4, 2024 and sell it today you would earn a total of  2.30  from holding Atico Mining or generate 29.87% return on investment over 90 days.

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

Amazon Inc  vs.  Atico Mining

Amazon Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 13 (%) 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.

Atico Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atico Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Amazon and Atico Mining

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

The idea behind Amazon Inc and Atico Mining 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.