Correlation Between Amazon and SKAGEN Global

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

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

Diversification Opportunities for Amazon and SKAGEN Global

0.0

Correlation Coefficient

Amazon  SKAGEN Global

Pay attention - limited upside

The 3 months correlation between Amazon and SKAGEN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SKAGEN Global A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAGEN Global A 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 SKAGEN Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAGEN Global A has no effect on the direction of Amazon i.e., Amazon and SKAGEN Global go up and down completely randomly.

Pair Corralation between Amazon and SKAGEN Global

If you would invest  11,477  in Amazon Inc on January 26, 2024 and sell it today you would earn a total of  6,182  from holding Amazon Inc or generate 53.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Amazon Inc  vs.  SKAGEN Global A

Amazon Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in May 2024.

SKAGEN Global A

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days SKAGEN Global A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, SKAGEN Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and SKAGEN Global

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

The idea behind Amazon Inc and SKAGEN Global A 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.