Correlation Between Transportadora and Amazon

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

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

Diversification Opportunities for Transportadora and Amazon

0.22

Correlation Coefficient

Transportadora  Amazon

Modest diversification

The 3 months correlation between Transportadora and Amazon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Amazon go up and down completely randomly.

Pair Corralation between Transportadora and Amazon

Assuming the 90 days trading horizon Transportadora is expected to generate 16.26 times less return on investment than Amazon. In addition to that, Transportadora is 2.34 times more volatile than Amazon Inc. It trades about 0.0 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.08 per unit of volatility. If you would invest  167,000  in Amazon Inc on December 4, 2024 and sell it today you would earn a total of  11,500  from holding Amazon Inc or generate 6.89% return on investment over 90 days.

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

Transportadora de Gas  vs.  Amazon Inc

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Transportadora is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amazon Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Transportadora and Amazon

The main advantage of trading using opposite Transportadora and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.