Correlation Between Amazon and LightInTheBox Holding

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Can any of the company-specific risk be diversified away by investing in both Amazon and LightInTheBox Holding 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 LightInTheBox Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and LightInTheBox Holding Co, you can compare the effects of market volatilities on Amazon and LightInTheBox Holding 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 LightInTheBox Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and LightInTheBox Holding.

Diversification Opportunities for Amazon and LightInTheBox Holding

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amazon and LightInTheBox is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and LightInTheBox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightInTheBox Holding 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 LightInTheBox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightInTheBox Holding has no effect on the direction of Amazon i.e., Amazon and LightInTheBox Holding go up and down completely randomly.

Pair Corralation between Amazon and LightInTheBox Holding

Given the investment horizon of 90 days Amazon is expected to generate 31.93 times less return on investment than LightInTheBox Holding. But when comparing it to its historical volatility, Amazon Inc is 1.68 times less risky than LightInTheBox Holding. It trades about 0.01 of its potential returns per unit of risk. LightInTheBox Holding Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  88.00  in LightInTheBox Holding Co on September 2, 2022 and sell it today you would earn a total of  29.00  from holding LightInTheBox Holding Co or generate 32.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  LightInTheBox Holding Co

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

LightInTheBox Holding 
LightInTheBox Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in LightInTheBox Holding Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, LightInTheBox Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

LightInTheBox Price Channel

Amazon and LightInTheBox Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and LightInTheBox Holding

The main advantage of trading using opposite Amazon and LightInTheBox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, LightInTheBox Holding 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 LightInTheBox Holding will offset losses from the drop in LightInTheBox Holding's long position.
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The idea behind Amazon Inc and LightInTheBox Holding Co 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.
LightInTheBox Holding vs. Merck Company
LightInTheBox Holding vs. Walmart
LightInTheBox Holding vs. Chevron Corp
LightInTheBox Holding vs. Verizon Communications
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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