Correlation Between ASOS PLC and Amazon
Can any of the company-specific risk be diversified away by investing in both ASOS PLC 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 ASOS PLC and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASOS PLC and Amazon Inc, you can compare the effects of market volatilities on ASOS PLC 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 ASOS PLC with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS PLC and Amazon.
Diversification Opportunities for ASOS PLC and Amazon
Excellent diversification
The 3 months correlation between ASOS and Amazon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ASOS PLC and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and ASOS PLC 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 ASOS PLC 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 ASOS PLC i.e., ASOS PLC and Amazon go up and down completely randomly.
Pair Corralation between ASOS PLC and Amazon
Assuming the 90 days trading horizon ASOS PLC is expected to under-perform the Amazon. In addition to that, ASOS PLC is 3.91 times more volatile than Amazon Inc. It trades about -0.01 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.27 per unit of volatility. If you would invest 16,170 in Amazon Inc on January 19, 2024 and sell it today you would earn a total of 858.00 from holding Amazon Inc or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASOS PLC vs. Amazon Inc
Performance |
| Timeline |
| ASOS PLC |
| Amazon Inc |
ASOS PLC and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASOS PLC and Amazon
The main advantage of trading using opposite ASOS PLC and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASOS PLC 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.| ASOS PLC vs. EMBARK EDUCATION LTD | ASOS PLC vs. United States Steel | ASOS PLC vs. CECO ENVIRONMENTAL | ASOS PLC vs. ABO GROUP ENVIRONMENT |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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