Correlation Between Amazon and Chewathai Public

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

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

Diversification Opportunities for Amazon and Chewathai Public

-0.12

Correlation Coefficient

Amazon  Chewathai Public

Good diversification

The 3 months correlation between Amazon and Chewathai is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Chewathai Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewathai Public 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 Chewathai Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewathai Public has no effect on the direction of Amazon i.e., Amazon and Chewathai Public go up and down completely randomly.

Pair Corralation between Amazon and Chewathai Public

Given the investment horizon of 90 days Amazon is expected to generate 22.62 times less return on investment than Chewathai Public. But when comparing it to its historical volatility, Amazon Inc is 37.5 times less risky than Chewathai Public. It trades about 0.09 of its potential returns per unit of risk. Chewathai Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Chewathai Public on September 4, 2024 and sell it today you would lose (10.00) from holding Chewathai Public or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.76%
Values	Daily Returns

Amazon Inc  vs.  Chewathai Public

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.

Chewathai Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chewathai Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Chewathai Public 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 Chewathai Public

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

The idea behind Amazon Inc and Chewathai Public 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 Global Correlations module to find global opportunities by holding instruments from different markets.