Correlation Between Amazon and Garo AB

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

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

Diversification Opportunities for Amazon and Garo AB

0.41

Correlation Coefficient

Amazon  Garo AB

Very weak diversification

The 3 months correlation between Amazon and Garo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Garo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garo AB 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 Garo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garo AB has no effect on the direction of Amazon i.e., Amazon and Garo AB go up and down completely randomly.

Pair Corralation between Amazon and Garo AB

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Garo AB. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.37 times less risky than Garo AB. The stock trades about -0.12 of its potential returns per unit of risk. The Garo AB is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,310  in Garo AB on December 29, 2024 and sell it today you would lose (318.00) from holding Garo AB or give up 13.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Amazon Inc  vs.  Garo AB

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Garo AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garo AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Amazon and Garo AB

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

The idea behind Amazon Inc and Garo AB 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.