Correlation Between Gravitas Education and Amazon

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

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

Diversification Opportunities for Gravitas Education and Amazon

0.33

Correlation Coefficient

Gravitas Education  Amazon

Weak diversification

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

Pair Corralation between Gravitas Education and Amazon

Given the investment horizon of 90 days Gravitas Education Holdings is expected to generate 3.4 times more return on investment than Amazon. However, Gravitas Education is 3.4 times more volatile than Amazon Inc. It trades about 0.05 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.05 per unit of risk. If you would invest  897.00  in Gravitas Education Holdings on January 25, 2024 and sell it today you would earn a total of  426.00  from holding Gravitas Education Holdings or generate 47.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.82%
Values	Daily Returns

Gravitas Education Holdings  vs.  Amazon Inc

Gravitas Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gravitas Education Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Gravitas Education is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Amazon Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 10 (%) 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.

Pair Trading with Gravitas Education and Amazon

The main advantage of trading using opposite Gravitas Education and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gravitas Education 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 Gravitas Education Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..