Correlation Between Amazon and Zencash Investment

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

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

Diversification Opportunities for Amazon and Zencash Investment

0.69

Correlation Coefficient

Amazon  Zencash Investment

Poor diversification

The 3 months correlation between Amazon and Zencash is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Zencash Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zencash Investment Trust 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 Zencash Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zencash Investment Trust has no effect on the direction of Amazon i.e., Amazon and Zencash Investment go up and down completely randomly.

Pair Corralation between Amazon and Zencash Investment

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.27 times more return on investment than Zencash Investment. However, Amazon Inc is 3.66 times less risky than Zencash Investment. It trades about -0.04 of its potential returns per unit of risk. Zencash Investment Trust is currently generating about -0.25 per unit of risk. If you would invest  22,609  in Amazon Inc on October 10, 2024 and sell it today you would lose (398.00) from holding Amazon Inc or give up 1.76% of portfolio value over 90 days.

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

Amazon Inc  vs.  Zencash Investment Trust

Amazon Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 12 (%) 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.

Zencash Investment Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zencash Investment Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Zencash Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and Zencash Investment

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

The idea behind Amazon Inc and Zencash Investment Trust 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.