Correlation Between AKA Brands and ASOS Plc
Can any of the company-specific risk be diversified away by investing in both AKA Brands and ASOS Plc 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 ASOS Plc 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 ASOS plc PK, you can compare the effects of market volatilities on AKA Brands and ASOS Plc 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 ASOS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKA Brands and ASOS Plc.
Diversification Opportunities for AKA Brands and ASOS Plc
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AKA and ASOS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AKA Brands Holding and ASOS plc PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS plc PK 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 ASOS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS plc PK has no effect on the direction of AKA Brands i.e., AKA Brands and ASOS Plc go up and down completely randomly.
Pair Corralation between AKA Brands and ASOS Plc
Considering the 90-day investment horizon AKA Brands Holding is expected to generate 2.22 times more return on investment than ASOS Plc. However, AKA Brands is 2.22 times more volatile than ASOS plc PK. It trades about -0.01 of its potential returns per unit of risk. ASOS plc PK is currently generating about -0.07 per unit of risk. If you would invest 2,277 in AKA Brands Holding on September 7, 2024 and sell it today you would lose (326.00) from holding AKA Brands Holding or give up 14.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
AKA Brands Holding vs. ASOS plc PK
Performance |
Timeline |
AKA Brands Holding |
ASOS plc PK |
AKA Brands and ASOS Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AKA Brands and ASOS Plc
The main advantage of trading using opposite AKA Brands and ASOS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKA Brands position performs unexpectedly, ASOS Plc 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 ASOS Plc will offset losses from the drop in ASOS Plc's long position.AKA Brands vs. Brilliant Earth Group | AKA Brands vs. Lulus Fashion Lounge | AKA Brands vs. Torrid Holdings | AKA Brands vs. Aveanna Healthcare Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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