Correlation Between Hour Loop and AKA Brands
Can any of the company-specific risk be diversified away by investing in both Hour Loop and AKA Brands 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 Hour Loop and AKA Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hour Loop and AKA Brands Holding, you can compare the effects of market volatilities on Hour Loop and AKA Brands 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 Hour Loop with a short position of AKA Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hour Loop and AKA Brands.
Diversification Opportunities for Hour Loop and AKA Brands
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hour and AKA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands Holding and Hour Loop 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 Hour Loop are associated (or correlated) with AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of Hour Loop i.e., Hour Loop and AKA Brands go up and down completely randomly.
Pair Corralation between Hour Loop and AKA Brands
Given the investment horizon of 90 days Hour Loop is expected to under-perform the AKA Brands. But the stock apears to be less risky and, when comparing its historical volatility, Hour Loop is 1.58 times less risky than AKA Brands. The stock trades about -0.05 of its potential returns per unit of risk. The AKA Brands Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,250 in AKA Brands Holding on March 5, 2024 and sell it today you would earn a total of 445.00 from holding AKA Brands Holding or generate 35.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hour Loop vs. AKA Brands Holding
Performance |
Timeline |
Hour Loop |
AKA Brands Holding |
Hour Loop and AKA Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hour Loop and AKA Brands
The main advantage of trading using opposite Hour Loop and AKA Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hour Loop position performs unexpectedly, AKA Brands 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 AKA Brands will offset losses from the drop in AKA Brands' long position.Hour Loop vs. Qurate Retail Series | Hour Loop vs. iPower Inc | Hour Loop vs. MOGU Inc | Hour Loop vs. Qurate Retail |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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