Correlation Between Amazon and GSRX Industries

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

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

Diversification Opportunities for Amazon and GSRX Industries

0.0

Correlation Coefficient

Amazon  GSRX Industries

Pay attention - limited upside

The 3 months correlation between Amazon and GSRX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and GSRX Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSRX Industries 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 GSRX Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSRX Industries has no effect on the direction of Amazon i.e., Amazon and GSRX Industries go up and down completely randomly.

Pair Corralation between Amazon and GSRX Industries

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.29 times more return on investment than GSRX Industries. However, Amazon Inc is 3.51 times less risky than GSRX Industries. It trades about 0.1 of its potential returns per unit of risk. GSRX Industries is currently generating about -0.02 per unit of risk. If you would invest  9,605  in Amazon Inc on September 7, 2024 and sell it today you would earn a total of  13,098  from holding Amazon Inc or generate 136.37% return on investment over 90 days.

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

Amazon Inc  vs.  GSRX Industries

Amazon Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 18 (%) 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.

GSRX Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSRX Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GSRX Industries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and GSRX Industries

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

The idea behind Amazon Inc and GSRX Industries 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.