Correlation Between Amazon and Inspecs Group

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

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

Diversification Opportunities for Amazon and Inspecs Group

0.48

Correlation Coefficient

Amazon  Inspecs Group

Very weak diversification

The 3 months correlation between Amazon and Inspecs is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Inspecs Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspecs Group plc 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 Inspecs Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspecs Group plc has no effect on the direction of Amazon i.e., Amazon and Inspecs Group go up and down completely randomly.

Pair Corralation between Amazon and Inspecs Group

Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.6 times more return on investment than Inspecs Group. However, Amazon Inc is 1.66 times less risky than Inspecs Group. It trades about 0.26 of its potential returns per unit of risk. Inspecs Group plc is currently generating about 0.06 per unit of risk. If you would invest  17,100  in Amazon Inc on April 23, 2025 and sell it today you would earn a total of  5,629  from holding Amazon Inc or generate 32.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Amazon Inc  vs.  Inspecs Group plc

Amazon Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amazon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Inspecs Group plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inspecs Group plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Inspecs Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Amazon and Inspecs Group

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

The idea behind Amazon Inc and Inspecs Group plc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.