Correlation Between Amazon and YDUQ3F

Can any of the company-specific risk be diversified away by investing in both Amazon and YDUQ3F 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 YDUQ3F into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon Inc and YDUQ3F, you can compare the effects of market volatilities on Amazon and YDUQ3F 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 YDUQ3F. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and YDUQ3F.

Diversification Opportunities for Amazon and YDUQ3F

-0.74

Correlation Coefficient

Amazon  YDUQ3F

Pay attention - limited upside

The 3 months correlation between Amazon and YDUQ3F is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and YDUQ3F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YDUQ3F 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 YDUQ3F. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YDUQ3F has no effect on the direction of Amazon i.e., Amazon and YDUQ3F go up and down completely randomly.

Pair Corralation between Amazon and YDUQ3F

Assuming the 90 days trading horizon Amazon Inc is expected to under-perform the YDUQ3F. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 2.48 times less risky than YDUQ3F. The stock trades about -0.2 of its potential returns per unit of risk. The YDUQ3F is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  833.00  in YDUQ3F on December 25, 2024 and sell it today you would earn a total of  308.00  from holding YDUQ3F or generate 36.97% 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.  YDUQ3F

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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

YDUQ3F

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YDUQ3F are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YDUQ3F sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and YDUQ3F

The main advantage of trading using opposite Amazon and YDUQ3F positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, YDUQ3F 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 YDUQ3F will offset losses from the drop in YDUQ3F's long position.

The idea behind Amazon Inc and YDUQ3F 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.