Correlation Between Amazon and Secure Property

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

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

Diversification Opportunities for Amazon and Secure Property

0.59

Correlation Coefficient

Amazon  Secure Property

Very weak diversification

The 3 months correlation between Amazon and Secure is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Secure Property Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Property Deve 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 Secure Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Property Deve has no effect on the direction of Amazon i.e., Amazon and Secure Property go up and down completely randomly.

Pair Corralation between Amazon and Secure Property

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Secure Property. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 2.44 times less risky than Secure Property. The stock trades about -0.09 of its potential returns per unit of risk. The Secure Property Development is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Secure Property Development on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Secure Property Development or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Amazon Inc  vs.  Secure Property Development

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 latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Secure Property Deve

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Property Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Secure Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amazon and Secure Property

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

The idea behind Amazon Inc and Secure Property Development 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.