Correlation Between AKA Brands and BoohooCom PLC

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Can any of the company-specific risk be diversified away by investing in both AKA Brands and BoohooCom 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 BoohooCom 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 BoohooCom PLC ADR, you can compare the effects of market volatilities on AKA Brands and BoohooCom 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 BoohooCom PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKA Brands and BoohooCom PLC.

Diversification Opportunities for AKA Brands and BoohooCom PLC

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between AKA and BoohooCom is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding AKA Brands Holding and BoohooCom PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BoohooCom PLC ADR 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 BoohooCom PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BoohooCom PLC ADR has no effect on the direction of AKA Brands i.e., AKA Brands and BoohooCom PLC go up and down completely randomly.

Pair Corralation between AKA Brands and BoohooCom PLC

Considering the 90-day investment horizon AKA Brands Holding is expected to under-perform the BoohooCom PLC. In addition to that, AKA Brands is 2.87 times more volatile than BoohooCom PLC ADR. It trades about -0.12 of its total potential returns per unit of risk. BoohooCom PLC ADR is currently generating about 0.3 per unit of volatility. If you would invest  712.00  in BoohooCom PLC ADR on September 6, 2024 and sell it today you would earn a total of  109.00  from holding BoohooCom PLC ADR or generate 15.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

AKA Brands Holding  vs.  BoohooCom PLC ADR

 Performance 
       Timeline  
AKA Brands Holding 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in AKA Brands Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward-looking signals, AKA Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.
BoohooCom PLC ADR 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BoohooCom PLC ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BoohooCom PLC showed solid returns over the last few months and may actually be approaching a breakup point.

AKA Brands and BoohooCom PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AKA Brands and BoohooCom PLC

The main advantage of trading using opposite AKA Brands and BoohooCom PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKA Brands position performs unexpectedly, BoohooCom 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 BoohooCom PLC will offset losses from the drop in BoohooCom PLC's long position.
The idea behind AKA Brands Holding and BoohooCom PLC ADR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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