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

-0.24

Correlation Coefficient

Amazon  Ekadharma International

Very good diversification

The 3 months correlation between Amazon and Ekadharma is -0.24. 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 generate 1.41 times more return on investment than Ekadharma International. However, Amazon is 1.41 times more volatile than Ekadharma International Tbk. It trades about -0.05 of its potential returns per unit of risk. Ekadharma International Tbk is currently generating about -0.28 per unit of risk. If you would invest  22,022  in Amazon Inc on December 2, 2024 and sell it today you would lose (794.00) from holding Amazon Inc or give up 3.61% of portfolio value over 90 days.

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

Amazon Inc  vs.  Ekadharma International Tbk

Amazon Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amazon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the 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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.