Correlation Between AMAZONCOM and PETROLEOS

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

By analyzing existing cross correlation between AMAZONCOM INC and PETROLEOS MEXICANOS 55, you can compare the effects of market volatilities on AMAZONCOM and PETROLEOS 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 AMAZONCOM with a short position of PETROLEOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMAZONCOM and PETROLEOS.

Diversification Opportunities for AMAZONCOM and PETROLEOS

-0.28

Correlation Coefficient

AMAZONCOM  PETROLEOS

Very good diversification

The 3 months correlation between AMAZONCOM and PETROLEOS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AMAZONCOM INC and PETROLEOS MEXICANOS 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETROLEOS MEXICANOS and AMAZONCOM 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 AMAZONCOM INC are associated (or correlated) with PETROLEOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETROLEOS MEXICANOS has no effect on the direction of AMAZONCOM i.e., AMAZONCOM and PETROLEOS go up and down completely randomly.

Pair Corralation between AMAZONCOM and PETROLEOS

Assuming the 90 days trading horizon AMAZONCOM INC is expected to generate 0.56 times more return on investment than PETROLEOS. However, AMAZONCOM INC is 1.77 times less risky than PETROLEOS. It trades about 0.14 of its potential returns per unit of risk. PETROLEOS MEXICANOS 55 is currently generating about 0.03 per unit of risk. If you would invest  6,385  in AMAZONCOM INC on May 6, 2025 and sell it today you would earn a total of  691.00  from holding AMAZONCOM INC or generate 10.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

AMAZONCOM INC  vs.  PETROLEOS MEXICANOS 55

AMAZONCOM INC

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMAZONCOM INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, AMAZONCOM may actually be approaching a critical reversion point that can send shares even higher in September 2025.

PETROLEOS MEXICANOS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PETROLEOS MEXICANOS 55 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PETROLEOS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMAZONCOM and PETROLEOS

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

The idea behind AMAZONCOM INC and PETROLEOS MEXICANOS 55 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.