Correlation Between Hour Loop and Kidpik Corp

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

0.06

Correlation Coefficient

Hour Loop  Kidpik Corp

Significant diversification

The 3 months correlation between Hour and Kidpik is 0.06. 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 generate 1.19 times more return on investment than Kidpik Corp. However, Hour Loop is 1.19 times more volatile than Kidpik Corp. It trades about 0.06 of its potential returns per unit of risk. Kidpik Corp is currently generating about 0.0 per unit of risk. If you would invest  146.00  in Hour Loop on August 31, 2024 and sell it today you would earn a total of  6.00  from holding Hour Loop or generate 4.11% return on investment over 90 days.

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

Hour Loop  vs.  Kidpik Corp

Hour Loop

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 4 (%) 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

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 weak forward indicators, Kidpik Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.