Correlation Between Hour Loop and Kidpik Corp

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

Diversification Opportunities for Hour Loop and Kidpik Corp

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Hour and Kidpik is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and Kidpik Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kidpik Corp 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 Kidpik Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kidpik Corp has no effect on the direction of Hour Loop i.e., Hour Loop and Kidpik Corp go up and down completely randomly.

Pair Corralation between Hour Loop and Kidpik Corp

Given the investment horizon of 90 days Hour Loop is expected to under-perform the Kidpik Corp. But the stock apears to be less risky and, when comparing its historical volatility, Hour Loop is 1.77 times less risky than Kidpik Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Kidpik Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  440.00  in Kidpik Corp on August 30, 2024 and sell it today you would lose (218.00) from holding Kidpik Corp or give up 49.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hour Loop  vs.  Kidpik Corp

 Performance 
       Timeline  
Hour Loop 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hour Loop reported solid returns over the last few months and may actually be approaching a breakup point.
Kidpik Corp 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Kidpik Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Kidpik Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Hour Loop and Kidpik Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hour Loop and Kidpik Corp

The main advantage of trading using opposite Hour Loop and Kidpik Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hour Loop position performs unexpectedly, Kidpik 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 Kidpik Corp will offset losses from the drop in Kidpik Corp's long position.
The idea behind Hour Loop and Kidpik 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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