Correlation Between BOC Hong and Amazon
Can any of the company-specific risk be diversified away by investing in both BOC Hong 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 BOC Hong and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOC Hong Kong and Amazon Inc, you can compare the effects of market volatilities on BOC Hong 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 BOC Hong with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Hong and Amazon.
Diversification Opportunities for BOC Hong and Amazon
Very weak diversification
The 3 months correlation between BOC and Amazon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BOC Hong Kong and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and BOC Hong 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 BOC Hong Kong 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 BOC Hong i.e., BOC Hong and Amazon go up and down completely randomly.
Pair Corralation between BOC Hong and Amazon
Assuming the 90 days horizon BOC Hong is expected to generate 3.81 times less return on investment than Amazon. But when comparing it to its historical volatility, BOC Hong Kong is 1.0 times less risky than Amazon. It trades about 0.05 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 12,840 in Amazon Inc on January 17, 2024 and sell it today you would earn a total of 5,522 from holding Amazon Inc or generate 43.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
BOC Hong Kong vs. Amazon Inc
Performance |
| Timeline |
| BOC Hong Kong |
| Amazon Inc |
BOC Hong and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOC Hong and Amazon
The main advantage of trading using opposite BOC Hong and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOC Hong 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 BOC Hong Kong 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.Check out your portfolio center.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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stocks Directory Find actively traded stocks across global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |