Correlation Between Amazon and Alpha Metallurgical

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

Diversification Opportunities for Amazon and Alpha Metallurgical

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amazon and Alpha is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Alpha Metallurgical Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Metallurgical 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 Alpha Metallurgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Metallurgical has no effect on the direction of Amazon i.e., Amazon and Alpha Metallurgical go up and down completely randomly.

Pair Corralation between Amazon and Alpha Metallurgical

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Alpha Metallurgical. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.94 times less risky than Alpha Metallurgical. The stock trades about -0.03 of its potential returns per unit of risk. The Alpha Metallurgical Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,049  in Alpha Metallurgical Resources on August 30, 2022 and sell it today you would earn a total of  15,881  from holding Alpha Metallurgical Resources or generate 1513.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Alpha Metallurgical Resources

 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 December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Alpha Metallurgical 
Alpha Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Metallurgical Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish primary indicators, Alpha Metallurgical reported solid returns over the last few months and may actually be approaching a breakup point.

Alpha Price Channel

Amazon and Alpha Metallurgical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Alpha Metallurgical

The main advantage of trading using opposite Amazon and Alpha Metallurgical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Alpha Metallurgical 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 Alpha Metallurgical will offset losses from the drop in Alpha Metallurgical's long position.
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The idea behind Amazon Inc and Alpha Metallurgical Resources 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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