Correlation Between Amazon CDR and Current Water

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

By analyzing existing cross correlation between Amazon CDR and Current Water Technologies, you can compare the effects of market volatilities on Amazon CDR and Current Water 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 Current Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Current Water.

Diversification Opportunities for Amazon CDR and Current Water

-0.58

Correlation Coefficient

Amazon CDR  Current Water

Excellent diversification

The 3 months correlation between Amazon and Current is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Current Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Current Water Techno 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 Current Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Current Water Techno has no effect on the direction of Amazon CDR i.e., Amazon CDR and Current Water go up and down completely randomly.

Pair Corralation between Amazon CDR and Current Water

Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.18 times more return on investment than Current Water. However, Amazon CDR is 5.67 times less risky than Current Water. It trades about 0.23 of its potential returns per unit of risk. Current Water Technologies is currently generating about -0.07 per unit of risk. If you would invest  2,136  in Amazon CDR on April 23, 2025 and sell it today you would earn a total of  556.00  from holding Amazon CDR or generate 26.03% return on investment over 90 days.

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

Amazon CDR  vs.  Current Water Technologies

Amazon CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 18 (%) 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.

Current Water Techno

Risk-Adjusted Performance

Very Weak

Over the last 90 days Current Water Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in August 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Amazon CDR and Current Water

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

The idea behind Amazon CDR and Current Water Technologies 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.