Correlation Between Amazon and Minerva SA

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

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

Diversification Opportunities for Amazon and Minerva SA

-0.74

Correlation Coefficient

Amazon  Minerva SA

Pay attention - limited upside

The 3 months correlation between Amazon and Minerva is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Minerva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva SA 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 Minerva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva SA has no effect on the direction of Amazon i.e., Amazon and Minerva SA go up and down completely randomly.

Pair Corralation between Amazon and Minerva SA

Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.9 times more return on investment than Minerva SA. However, Amazon Inc is 1.11 times less risky than Minerva SA. It trades about 0.2 of its potential returns per unit of risk. Minerva SA is currently generating about -0.22 per unit of risk. If you would invest  4,978  in Amazon Inc on August 31, 2024 and sell it today you would earn a total of  1,177  from holding Amazon Inc or generate 23.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Amazon Inc  vs.  Minerva SA

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. Despite somewhat weak basic indicators, Amazon sustained solid returns over the last few months and may actually be approaching a breakup point.

Minerva SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minerva SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Amazon and Minerva SA

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

The idea behind Amazon Inc and Minerva SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.