Correlation Between Amazon and Maritime Resources

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

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

Diversification Opportunities for Amazon and Maritime Resources

-0.29

Correlation Coefficient

Amazon  Maritime Resources

Very good diversification

The 3 months correlation between Amazon and Maritime is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Maritime Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maritime Resources Corp 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 Maritime Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maritime Resources Corp has no effect on the direction of Amazon i.e., Amazon and Maritime Resources go up and down completely randomly.

Pair Corralation between Amazon and Maritime Resources

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Maritime Resources. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 2.69 times less risky than Maritime Resources. The stock trades about -0.12 of its potential returns per unit of risk. The Maritime Resources Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5.50  in Maritime Resources Corp on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Maritime Resources Corp or generate 54.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Amazon Inc  vs.  Maritime Resources Corp

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Maritime Resources Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maritime Resources Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Maritime Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and Maritime Resources

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

The idea behind Amazon Inc and Maritime Resources Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.