Correlation Between Kits Eyecare and Thinkific Labs

Can any of the company-specific risk be diversified away by investing in both Kits Eyecare and Thinkific Labs 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 Kits Eyecare and Thinkific Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kits Eyecare and Thinkific Labs, you can compare the effects of market volatilities on Kits Eyecare and Thinkific Labs 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 Kits Eyecare with a short position of Thinkific Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kits Eyecare and Thinkific Labs.

Diversification Opportunities for Kits Eyecare and Thinkific Labs

-0.75

Correlation Coefficient

Kits Eyecare  Thinkific Labs

Pay attention - limited upside

The 3 months correlation between Kits and Thinkific is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kits Eyecare and Thinkific Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkific Labs and Kits Eyecare 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 Kits Eyecare are associated (or correlated) with Thinkific Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkific Labs has no effect on the direction of Kits Eyecare i.e., Kits Eyecare and Thinkific Labs go up and down completely randomly.

Pair Corralation between Kits Eyecare and Thinkific Labs

Assuming the 90 days trading horizon Kits Eyecare is expected to under-perform the Thinkific Labs. But the stock apears to be less risky and, when comparing its historical volatility, Kits Eyecare is 2.17 times less risky than Thinkific Labs. The stock trades about -0.21 of its potential returns per unit of risk. The Thinkific Labs is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Thinkific Labs on October 9, 2024 and sell it today you would earn a total of  19.00  from holding Thinkific Labs or generate 6.44% return on investment over 90 days.

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

Kits Eyecare  vs.  Thinkific Labs

Kits Eyecare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kits Eyecare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Thinkific Labs

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thinkific Labs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Thinkific Labs displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kits Eyecare and Thinkific Labs

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

The idea behind Kits Eyecare and Thinkific Labs 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.