Correlation Between AKA Brands and Appian Corp

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

By analyzing existing cross correlation between AKA Brands Holding and Appian Corp, you can compare the effects of market volatilities on AKA Brands and Appian Corp 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 AKA Brands with a short position of Appian Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKA Brands and Appian Corp.

Diversification Opportunities for AKA Brands and Appian Corp

-0.58

Correlation Coefficient

AKA Brands  Appian Corp

Excellent diversification

The 3 months correlation between AKA and Appian is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding AKA Brands Holding and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and AKA Brands 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 AKA Brands Holding are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of AKA Brands i.e., AKA Brands and Appian Corp go up and down completely randomly.

Pair Corralation between AKA Brands and Appian Corp

Considering the 90-day investment horizon AKA Brands Holding is expected to under-perform the Appian Corp. In addition to that, AKA Brands is 5.13 times more volatile than Appian Corp. It trades about -0.12 of its total potential returns per unit of risk. Appian Corp is currently generating about -0.43 per unit of volatility. If you would invest  3,224  in Appian Corp on March 11, 2024 and sell it today you would lose (486.00) from holding Appian Corp or give up 15.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AKA Brands Holding  vs.  Appian Corp

AKA Brands Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AKA Brands Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, AKA Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Appian Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Appian Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AKA Brands and Appian Corp

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

The idea behind AKA Brands Holding and Appian Corp 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.