Correlation Between Amazon and PT UBC

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

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

Diversification Opportunities for Amazon and PT UBC

-0.42

Correlation Coefficient

Amazon  PT UBC

Very good diversification

The 3 months correlation between Amazon and LABS is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and PT UBC Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT UBC Medical 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 PT UBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT UBC Medical has no effect on the direction of Amazon i.e., Amazon and PT UBC go up and down completely randomly.

Pair Corralation between Amazon and PT UBC

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.42 times more return on investment than PT UBC. However, Amazon Inc is 2.41 times less risky than PT UBC. It trades about 0.09 of its potential returns per unit of risk. PT UBC Medical is currently generating about 0.02 per unit of risk. If you would invest  18,366  in Amazon Inc on September 12, 2024 and sell it today you would earn a total of  4,138  from holding Amazon Inc or generate 22.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.4%
Values	Daily Returns

Amazon Inc  vs.  PT UBC Medical

Amazon Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 14 (%) 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.

PT UBC Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT UBC Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT UBC 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 PT UBC

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

The idea behind Amazon Inc and PT UBC Medical 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.