Correlation Between Amazon and Betonjaya Manunggal

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

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

Diversification Opportunities for Amazon and Betonjaya Manunggal

0.02

Correlation Coefficient

Amazon  Betonjaya Manunggal

Significant diversification

The 3 months correlation between Amazon and Betonjaya is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Betonjaya Manunggal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betonjaya Manunggal Tbk 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 Betonjaya Manunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betonjaya Manunggal Tbk has no effect on the direction of Amazon i.e., Amazon and Betonjaya Manunggal go up and down completely randomly.

Pair Corralation between Amazon and Betonjaya Manunggal

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Betonjaya Manunggal. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.15 times less risky than Betonjaya Manunggal. The stock trades about -0.12 of its potential returns per unit of risk. The Betonjaya Manunggal Tbk is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  44,400  in Betonjaya Manunggal Tbk on December 30, 2024 and sell it today you would lose (3,400) from holding Betonjaya Manunggal Tbk or give up 7.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Amazon Inc  vs.  Betonjaya Manunggal Tbk

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Betonjaya Manunggal Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Betonjaya Manunggal Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Amazon and Betonjaya Manunggal

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

The idea behind Amazon Inc and Betonjaya Manunggal Tbk 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.