Correlation Between AKA Brands and Monotaro

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

Diversification Opportunities for AKA Brands and Monotaro

-0.28

Correlation Coefficient

AKA Brands  Monotaro

Very good diversification

The 3 months correlation between AKA and Monotaro is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AKA Brands Holding and Monotaro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monotaro 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 Monotaro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monotaro has no effect on the direction of AKA Brands i.e., AKA Brands and Monotaro go up and down completely randomly.

Pair Corralation between AKA Brands and Monotaro

Considering the 90-day investment horizon AKA Brands Holding is expected to generate 2.8 times more return on investment than Monotaro. However, AKA Brands is 2.8 times more volatile than Monotaro Co. It trades about 0.04 of its potential returns per unit of risk. Monotaro Co is currently generating about 0.03 per unit of risk. If you would invest  1,884  in AKA Brands Holding on October 5, 2024 and sell it today you would lose (34.00) from holding AKA Brands Holding or give up 1.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

AKA Brands Holding  vs.  Monotaro Co

AKA Brands Holding

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days AKA Brands Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, AKA Brands is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Monotaro

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monotaro Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Monotaro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AKA Brands and Monotaro

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

The idea behind AKA Brands Holding and Monotaro Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.