Correlation Between Amazon and SVENSKA CELLULO
Can any of the company-specific risk be diversified away by investing in both Amazon and SVENSKA CELLULO 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 SVENSKA CELLULO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and SVENSKA CELLULO B , you can compare the effects of market volatilities on Amazon and SVENSKA CELLULO 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 SVENSKA CELLULO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and SVENSKA CELLULO.
Diversification Opportunities for Amazon and SVENSKA CELLULO
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and SVENSKA is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B 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 SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of Amazon i.e., Amazon and SVENSKA CELLULO go up and down completely randomly.
Pair Corralation between Amazon and SVENSKA CELLULO
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.84 times more return on investment than SVENSKA CELLULO. However, Amazon Inc is 1.19 times less risky than SVENSKA CELLULO. It trades about 0.1 of its potential returns per unit of risk. SVENSKA CELLULO B is currently generating about 0.04 per unit of risk. If you would invest 8,497 in Amazon Inc on August 27, 2024 and sell it today you would earn a total of 10,459 from holding Amazon Inc or generate 123.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. SVENSKA CELLULO B
Performance |
| Timeline |
| Amazon Inc |
| SVENSKA CELLULO B |
Amazon and SVENSKA CELLULO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and SVENSKA CELLULO
The main advantage of trading using opposite Amazon and SVENSKA CELLULO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, SVENSKA CELLULO 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 SVENSKA CELLULO will offset losses from the drop in SVENSKA CELLULO's long position.| Amazon vs. KENNAMETAL INC | Amazon vs. Ubisoft Entertainment SA | Amazon vs. Live Nation Entertainment | Amazon vs. Seven West Media |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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