Correlation Between PROSIEBENSAT1 MEDIADR4 and Amazon

Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4 and Amazon 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 PROSIEBENSAT1 MEDIADR4 and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and Amazon Inc, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4 and Amazon 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 PROSIEBENSAT1 MEDIADR4 with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4 and Amazon.

Diversification Opportunities for PROSIEBENSAT1 MEDIADR4 and Amazon

-0.13

Correlation Coefficient

PROSIEBENSAT1 MEDIADR4  Amazon

Good diversification

The 3 months correlation between PROSIEBENSAT1 and Amazon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of PROSIEBENSAT1 MEDIADR4 i.e., PROSIEBENSAT1 MEDIADR4 and Amazon go up and down completely randomly.

Pair Corralation between PROSIEBENSAT1 MEDIADR4 and Amazon

Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to generate 1.02 times more return on investment than Amazon. However, PROSIEBENSAT1 MEDIADR4 is 1.02 times more volatile than Amazon Inc. It trades about 0.13 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.06 per unit of risk. If you would invest  136.00  in PROSIEBENSAT1 MEDIADR4 on February 18, 2025 and sell it today you would earn a total of  36.00  from holding PROSIEBENSAT1 MEDIADR4 or generate 26.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PROSIEBENSAT1 MEDIADR4  vs.  Amazon Inc

PROSIEBENSAT1 MEDIADR4

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PROSIEBENSAT1 MEDIADR4 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain primary indicators, PROSIEBENSAT1 MEDIADR4 reported solid returns over the last few months and may actually be approaching a breakup point.

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with PROSIEBENSAT1 MEDIADR4 and Amazon

The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4 and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4 position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.

The idea behind PROSIEBENSAT1 MEDIADR4 and Amazon Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.