Correlation Between Amazon and Camtek

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

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

Diversification Opportunities for Amazon and Camtek

-0.52

Correlation Coefficient

Amazon  Camtek

Excellent diversification

The 3 months correlation between Amazon and Camtek is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Camtek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camtek 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 Camtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camtek has no effect on the direction of Amazon i.e., Amazon and Camtek go up and down completely randomly.

Pair Corralation between Amazon and Camtek

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.49 times more return on investment than Camtek. However, Amazon Inc is 2.03 times less risky than Camtek. It trades about 0.13 of its potential returns per unit of risk. Camtek is currently generating about -0.08 per unit of risk. If you would invest  17,850  in Amazon Inc on August 30, 2024 and sell it today you would earn a total of  2,724  from holding Amazon Inc or generate 15.26% 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.  Camtek

Amazon Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 10 (%) 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.

Camtek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camtek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Amazon and Camtek

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

The idea behind Amazon Inc and Camtek 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.