Correlation Between PT Bank and Amazon

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

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

Diversification Opportunities for PT Bank and Amazon

-0.78

Correlation Coefficient

PT Bank  Amazon

Pay attention - limited upside

The 3 months correlation between PQ9 and Amazon is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and PT Bank 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 PT Bank Mandiri are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of PT Bank i.e., PT Bank and Amazon go up and down completely randomly.

Pair Corralation between PT Bank and Amazon

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Amazon. In addition to that, PT Bank is 2.73 times more volatile than Amazon Inc. It trades about -0.03 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.25 per unit of volatility. If you would invest  17,104  in Amazon Inc on October 10, 2024 and sell it today you would earn a total of  4,486  from holding Amazon Inc or generate 26.23% return on investment over 90 days.

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

PT Bank Mandiri  vs.  Amazon Inc

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amazon Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Amazon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Amazon

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

The idea behind PT Bank Mandiri and Amazon Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.