Correlation Between Amazon and Bank Mega

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

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

Diversification Opportunities for Amazon and Bank Mega

0.5

Correlation Coefficient

Amazon  Bank Mega

Very weak diversification

The 3 months correlation between Amazon and Bank is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Bank Mega Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mega Tbk 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 Bank Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mega Tbk has no effect on the direction of Amazon i.e., Amazon and Bank Mega go up and down completely randomly.

Pair Corralation between Amazon and Bank Mega

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.96 times more return on investment than Bank Mega. However, Amazon Inc is 1.05 times less risky than Bank Mega. It trades about -0.12 of its potential returns per unit of risk. Bank Mega Tbk is currently generating about -0.12 per unit of risk. If you would invest  22,130  in Amazon Inc on December 29, 2024 and sell it today you would lose (2,858) from holding Amazon Inc or give up 12.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Amazon Inc  vs.  Bank Mega Tbk

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.

Bank Mega Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Mega Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Amazon and Bank Mega

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

The idea behind Amazon Inc and Bank Mega Tbk 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.