Correlation Between AKA Brands and Alibaba Group

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

Diversification Opportunities for AKA Brands and Alibaba Group

0.33

Correlation Coefficient

AKA Brands  Alibaba Group

Weak diversification

The 3 months correlation between AKA and Alibaba is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AKA Brands Holding and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of AKA Brands i.e., AKA Brands and Alibaba Group go up and down completely randomly.

Pair Corralation between AKA Brands and Alibaba Group

Considering the 90-day investment horizon AKA Brands Holding is expected to under-perform the Alibaba Group. In addition to that, AKA Brands is 2.0 times more volatile than Alibaba Group Holding. It trades about -0.2 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.25 per unit of volatility. If you would invest  9,232  in Alibaba Group Holding on October 9, 2024 and sell it today you would lose (680.00) from holding Alibaba Group Holding or give up 7.37% of portfolio value over 90 days.

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

AKA Brands Holding  vs.  Alibaba Group Holding

AKA Brands Holding

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alibaba Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AKA Brands and Alibaba Group

The main advantage of trading using opposite AKA Brands and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKA Brands position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.

The idea behind AKA Brands Holding and Alibaba Group 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.