Correlation Between Amazon and EAU Technologies

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Can any of the company-specific risk be diversified away by investing in both Amazon and EAU Technologies 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 EAU Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and EAU Technologies, you can compare the effects of market volatilities on Amazon and EAU Technologies 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 EAU Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and EAU Technologies.

Diversification Opportunities for Amazon and EAU Technologies

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and EAU Technologies is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and EAU Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAU Technologies 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 EAU Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAU Technologies has no effect on the direction of Amazon i.e., Amazon and EAU Technologies go up and down completely randomly.

Pair Corralation between Amazon and EAU Technologies

If you would invest  0.10  in EAU Technologies on September 11, 2022 and sell it today you would earn a total of  0.00  from holding EAU Technologies or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  EAU Technologies

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
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Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

EAU Technologies 
EAU Technologies Performance
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Over the last 90 days EAU Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EAU Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

EAU Technologies Price Channel

Amazon and EAU Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and EAU Technologies

The main advantage of trading using opposite Amazon and EAU Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, EAU Technologies 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 EAU Technologies will offset losses from the drop in EAU Technologies' long position.
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The idea behind Amazon Inc and EAU Technologies 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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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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