Correlation Between Amazon and Ekadharma International

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

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

Diversification Opportunities for Amazon and Ekadharma International

0.85

Correlation Coefficient

Amazon  Ekadharma International

Very poor diversification

The 3 months correlation between Amazon and Ekadharma is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Ekadharma International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekadharma International 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 Ekadharma International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekadharma International has no effect on the direction of Amazon i.e., Amazon and Ekadharma International go up and down completely randomly.

Pair Corralation between Amazon and Ekadharma International

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Ekadharma International. In addition to that, Amazon is 1.61 times more volatile than Ekadharma International Tbk. It trades about -0.12 of its total potential returns per unit of risk. Ekadharma International Tbk is currently generating about -0.15 per unit of volatility. If you would invest  21,200  in Ekadharma International Tbk on December 30, 2024 and sell it today you would lose (2,000) from holding Ekadharma International Tbk or give up 9.43% of portfolio value over 90 days.

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

Amazon Inc  vs.  Ekadharma International 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.

Ekadharma International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ekadharma International 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 Ekadharma International

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

The idea behind Amazon Inc and Ekadharma International 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .