Correlation Between Amazon and Grupo Televisa

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

Diversification Opportunities for Amazon and Grupo Televisa

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Amazon and Grupo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB 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 Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of Amazon i.e., Amazon and Grupo Televisa go up and down completely randomly.

Pair Corralation between Amazon and Grupo Televisa

Given the investment horizon of 90 days Amazon Inc is expected to generate 1.01 times more return on investment than Grupo Televisa. However, Amazon is 1.01 times more volatile than Grupo Televisa SAB. It trades about -0.07 of its potential returns per unit of risk. Grupo Televisa SAB is currently generating about -0.07 per unit of risk. If you would invest  17,728  in Amazon Inc on September 11, 2022 and sell it today you would lose (8,819)  from holding Amazon Inc or give up 49.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Grupo Televisa SAB

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
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

Grupo Televisa SAB 
Grupo Performance
0 of 100
Over the last 90 days Grupo Televisa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Grupo Price Channel

Amazon and Grupo Televisa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Grupo Televisa

The main advantage of trading using opposite Amazon and Grupo Televisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Grupo Televisa 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 Grupo Televisa will offset losses from the drop in Grupo Televisa's long position.
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The idea behind Amazon Inc and Grupo Televisa SAB 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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