Correlation Between Amazon CDR and Diamond Fields

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

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

Diversification Opportunities for Amazon CDR and Diamond Fields

-0.67

Correlation Coefficient

Amazon CDR  Diamond Fields

Excellent diversification

The 3 months correlation between Amazon and Diamond is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Diamond Fields Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Fields Resources and Amazon CDR 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 CDR are associated (or correlated) with Diamond Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Fields Resources has no effect on the direction of Amazon CDR i.e., Amazon CDR and Diamond Fields go up and down completely randomly.

Pair Corralation between Amazon CDR and Diamond Fields

Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.15 times more return on investment than Diamond Fields. However, Amazon CDR is 6.55 times less risky than Diamond Fields. It trades about 0.26 of its potential returns per unit of risk. Diamond Fields Resources is currently generating about 0.01 per unit of risk. If you would invest  2,051  in Amazon CDR on April 22, 2025 and sell it today you would earn a total of  641.00  from holding Amazon CDR or generate 31.25% return on investment over 90 days.

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

Amazon CDR  vs.  Diamond Fields Resources

Amazon CDR

Risk-Adjusted Performance

Solid

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

Diamond Fields Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Fields Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Diamond Fields may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Amazon CDR and Diamond Fields

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

The idea behind Amazon CDR and Diamond Fields Resources 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.