Correlation Between Amazon and KlausTech

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

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

Diversification Opportunities for Amazon and KlausTech

0.0

Correlation Coefficient

Amazon  KlausTech

Pay attention - limited upside

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

Pair Corralation between Amazon and KlausTech

If you would invest  18,649  in Amazon Inc on September 13, 2024 and sell it today you would earn a total of  4,377  from holding Amazon Inc or generate 23.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Amazon Inc  vs.  KlausTech

Amazon Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 15 (%) 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.

KlausTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KlausTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KlausTech is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Amazon and KlausTech

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

The idea behind Amazon Inc and KlausTech 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .