Correlation Between 24SEVENOFFICE GROUP and Amazon

Can any of the company-specific risk be diversified away by investing in both 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 24SEVENOFFICE GROUP AB and Amazon Inc, you can compare the effects of market volatilities on 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of 24SEVENOFFICE GROUP and Amazon.

Diversification Opportunities for 24SEVENOFFICE GROUP and Amazon

0.33

Correlation Coefficient

24SEVENOFFICE GROUP  Amazon

Weak diversification

The 3 months correlation between 24SEVENOFFICE and Amazon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding 24SEVENOFFICE GROUP AB and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP AB 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 24SEVENOFFICE GROUP i.e., 24SEVENOFFICE GROUP and Amazon go up and down completely randomly.

Pair Corralation between 24SEVENOFFICE GROUP and Amazon

Assuming the 90 days horizon 24SEVENOFFICE GROUP AB is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, 24SEVENOFFICE GROUP AB is 1.7 times less risky than Amazon. The stock trades about -0.03 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  17,246  in Amazon Inc on October 12, 2024 and sell it today you would earn a total of  4,349  from holding Amazon Inc or generate 25.22% return on investment over 90 days.

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

24SEVENOFFICE GROUP AB  vs.  Amazon Inc

24SEVENOFFICE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 24SEVENOFFICE GROUP AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, 24SEVENOFFICE GROUP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Amazon Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Amazon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 24SEVENOFFICE GROUP and Amazon

The main advantage of trading using opposite 24SEVENOFFICE GROUP and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP AB 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.