Correlation Between METISA Metalrgica and Amazon

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

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

Diversification Opportunities for METISA Metalrgica and Amazon

0.27

Correlation Coefficient

METISA Metalrgica  Amazon

Modest diversification

The 3 months correlation between METISA and Amazon is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Amazon go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Amazon

Assuming the 90 days trading horizon METISA Metalrgica is expected to generate 2.21 times less return on investment than Amazon. In addition to that, METISA Metalrgica is 1.04 times more volatile than Amazon Inc. It trades about 0.06 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.14 per unit of volatility. If you would invest  5,392  in Amazon Inc on April 25, 2025 and sell it today you would earn a total of  906.00  from holding Amazon Inc or generate 16.8% return on investment over 90 days.

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

METISA Metalrgica Timboense  vs.  Amazon Inc

METISA Metalrgica

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Amazon Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Amazon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METISA Metalrgica and Amazon

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

The idea behind METISA Metalrgica Timboense and Amazon Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.