Correlation Between Amazon and Concrete Pumping

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

Diversification Opportunities for Amazon and Concrete Pumping

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amazon and Concrete is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Concrete Pumping Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concrete Pumping Holdings 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 Concrete Pumping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concrete Pumping Holdings has no effect on the direction of Amazon i.e., Amazon and Concrete Pumping go up and down completely randomly.

Pair Corralation between Amazon and Concrete Pumping

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Concrete Pumping. In addition to that, Amazon is 1.62 times more volatile than Concrete Pumping Holdings. It trades about -0.2 of its total potential returns per unit of risk. Concrete Pumping Holdings is currently generating about -0.04 per unit of volatility. If you would invest  700.00  in Concrete Pumping Holdings on September 11, 2022 and sell it today you would lose (42.00)  from holding Concrete Pumping Holdings or give up 6.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Concrete Pumping Holdings

 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

Concrete Pumping Holdings 
Concrete Performance
0 of 100
Over the last 90 days Concrete Pumping Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Concrete Pumping is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

Concrete Price Channel

Amazon and Concrete Pumping Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Concrete Pumping

The main advantage of trading using opposite Amazon and Concrete Pumping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Concrete Pumping 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 Concrete Pumping will offset losses from the drop in Concrete Pumping's long position.
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The idea behind Amazon Inc and Concrete Pumping Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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