Correlation Between Amazon and Swedencare Publ

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

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

Diversification Opportunities for Amazon and Swedencare Publ

0.47

Correlation Coefficient

Amazon  Swedencare Publ

Very weak diversification

The 3 months correlation between Amazon and Swedencare is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Swedencare publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedencare publ 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 Swedencare Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedencare publ AB has no effect on the direction of Amazon i.e., Amazon and Swedencare Publ go up and down completely randomly.

Pair Corralation between Amazon and Swedencare Publ

Given the investment horizon of 90 days Amazon is expected to generate 1.02 times less return on investment than Swedencare Publ. But when comparing it to its historical volatility, Amazon Inc is 1.06 times less risky than Swedencare Publ. It trades about 0.15 of its potential returns per unit of risk. Swedencare publ AB is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,188  in Swedencare publ AB on September 3, 2024 and sell it today you would earn a total of  772.00  from holding Swedencare publ AB or generate 18.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Amazon Inc  vs.  Swedencare publ AB

Amazon Inc

Risk-Adjusted Performance

11 of 100

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. In spite of very unsteady basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Swedencare publ AB

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Amazon and Swedencare Publ

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

The idea behind Amazon Inc and Swedencare publ 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.

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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .