Correlation Between Amazon and YeSUN Tech

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

By analyzing existing cross correlation between Amazon Inc and YeSUN Tech CoLtd, you can compare the effects of market volatilities on Amazon and YeSUN Tech 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 YeSUN Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and YeSUN Tech.

Diversification Opportunities for Amazon and YeSUN Tech

-0.89

Correlation Coefficient

Amazon  YeSUN Tech

Pay attention - limited upside

The 3 months correlation between Amazon and YeSUN is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and YeSUN Tech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YeSUN Tech CoLtd 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 YeSUN Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YeSUN Tech CoLtd has no effect on the direction of Amazon i.e., Amazon and YeSUN Tech go up and down completely randomly.

Pair Corralation between Amazon and YeSUN Tech

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.47 times more return on investment than YeSUN Tech. However, Amazon Inc is 2.11 times less risky than YeSUN Tech. It trades about 0.18 of its potential returns per unit of risk. YeSUN Tech CoLtd is currently generating about -0.18 per unit of risk. If you would invest  18,700  in Amazon Inc on September 12, 2024 and sell it today you would earn a total of  3,804  from holding Amazon Inc or generate 20.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.63%
Values	Daily Returns

Amazon Inc  vs.  YeSUN Tech CoLtd

Amazon Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

YeSUN Tech CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YeSUN Tech CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Amazon and YeSUN Tech

The main advantage of trading using opposite Amazon and YeSUN Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, YeSUN Tech 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 YeSUN Tech will offset losses from the drop in YeSUN Tech's long position.

The idea behind Amazon Inc and YeSUN Tech CoLtd 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.