Correlation Between Amazon and HSBC NASDAQ

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

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

Diversification Opportunities for Amazon and HSBC NASDAQ

0.12

Correlation Coefficient

Amazon  HSBC NASDAQ

Average diversification

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

Pair Corralation between Amazon and HSBC NASDAQ

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the HSBC NASDAQ. In addition to that, Amazon is 1.28 times more volatile than HSBC NASDAQ Global. It trades about -0.05 of its total potential returns per unit of risk. HSBC NASDAQ Global is currently generating about -0.05 per unit of volatility. If you would invest  880.00  in HSBC NASDAQ Global on December 2, 2024 and sell it today you would lose (26.00) from holding HSBC NASDAQ Global or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

Amazon Inc  vs.  HSBC NASDAQ Global

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.

HSBC NASDAQ Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC NASDAQ Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HSBC NASDAQ is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amazon and HSBC NASDAQ

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

The idea behind Amazon Inc and HSBC NASDAQ Global 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.