Correlation Between Apple and Amazon CDR

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

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

Diversification Opportunities for Apple and Amazon CDR

0.31

Correlation Coefficient

Apple  Amazon CDR

Weak diversification

The 3 months correlation between Apple and Amazon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Apple 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 Apple Inc CDR are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Apple i.e., Apple and Amazon CDR go up and down completely randomly.

Pair Corralation between Apple and Amazon CDR

Assuming the 90 days trading horizon Apple is expected to generate 3.33 times less return on investment than Amazon CDR. But when comparing it to its historical volatility, Apple Inc CDR is 1.11 times less risky than Amazon CDR. It trades about 0.09 of its potential returns per unit of risk. Amazon CDR is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,976  in Amazon CDR on April 20, 2025 and sell it today you would earn a total of  678.00  from holding Amazon CDR or generate 34.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  Amazon CDR

Apple Inc CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Amazon CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Amazon CDR displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Amazon CDR

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

The idea behind Apple Inc CDR and Amazon CDR 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.

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 the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.