Correlation Between Amazon and Hotel Fitra

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

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

Diversification Opportunities for Amazon and Hotel Fitra

-0.63

Correlation Coefficient

Amazon  Hotel Fitra

Excellent diversification

The 3 months correlation between Amazon and Hotel is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Hotel Fitra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Fitra 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 Hotel Fitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Fitra International has no effect on the direction of Amazon i.e., Amazon and Hotel Fitra go up and down completely randomly.

Pair Corralation between Amazon and Hotel Fitra

Given the investment horizon of 90 days Amazon Inc is expected to generate 1.93 times more return on investment than Hotel Fitra. However, Amazon is 1.93 times more volatile than Hotel Fitra International. It trades about 0.19 of its potential returns per unit of risk. Hotel Fitra International is currently generating about -0.14 per unit of risk. If you would invest  19,578  in Amazon Inc on September 4, 2024 and sell it today you would earn a total of  1,493  from holding Amazon Inc or generate 7.63% return on investment over 90 days.

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

Amazon Inc  vs.  Hotel Fitra International

Amazon Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 13 (%) 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.

Hotel Fitra International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Fitra International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Hotel Fitra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Amazon and Hotel Fitra

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

The idea behind Amazon Inc and Hotel Fitra International 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.