Correlation Between Asbury Automotive and AKA Brands

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

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

Diversification Opportunities for Asbury Automotive and AKA Brands

-0.41

Correlation Coefficient

Asbury Automotive  AKA Brands

Very good diversification

The 3 months correlation between Asbury and AKA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group 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 Asbury Automotive 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 Asbury Automotive Group 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 Asbury Automotive i.e., Asbury Automotive and AKA Brands go up and down completely randomly.

Pair Corralation between Asbury Automotive and AKA Brands

Considering the 90-day investment horizon Asbury Automotive is expected to generate 4.17 times less return on investment than AKA Brands. But when comparing it to its historical volatility, Asbury Automotive Group is 3.16 times less risky than AKA Brands. It trades about 0.04 of its potential returns per unit of risk. AKA Brands Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  904.00  in AKA Brands Holding on December 3, 2024 and sell it today you would earn a total of  523.00  from holding AKA Brands Holding or generate 57.85% return on investment over 90 days.

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

Asbury Automotive Group  vs.  AKA Brands Holding

Asbury Automotive

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Asbury Automotive is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

AKA Brands Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days AKA Brands Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Asbury Automotive and AKA Brands

The main advantage of trading using opposite Asbury Automotive and AKA Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive 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.

The idea behind Asbury Automotive Group and AKA Brands Holding 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.