Correlation Between Liquidity Services and AKA Brands

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

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

Diversification Opportunities for Liquidity Services and AKA Brands

-0.41

Correlation Coefficient

Liquidity Services  AKA Brands

Very good diversification

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

Pair Corralation between Liquidity Services and AKA Brands

Given the investment horizon of 90 days Liquidity Services is expected to generate 0.82 times more return on investment than AKA Brands. However, Liquidity Services is 1.22 times less risky than AKA Brands. It trades about 0.12 of its potential returns per unit of risk. AKA Brands Holding is currently generating about -0.03 per unit of risk. If you would invest  2,334  in Liquidity Services on September 19, 2024 and sell it today you would earn a total of  776.00  from holding Liquidity Services or generate 33.25% return on investment over 90 days.

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

Liquidity Services  vs.  AKA Brands Holding

Liquidity Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liquidity Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Liquidity Services unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Liquidity Services and AKA Brands

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

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..