Correlation Between Liquidity Services and Kidpik Corp

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

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

Diversification Opportunities for Liquidity Services and Kidpik Corp

0.29

Correlation Coefficient

Liquidity Services  Kidpik Corp

Modest diversification

The 3 months correlation between Liquidity and Kidpik is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services and Kidpik Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kidpik Corp 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 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 Liquidity Services i.e., Liquidity Services and Kidpik Corp go up and down completely randomly.

Pair Corralation between Liquidity Services and Kidpik Corp

Given the investment horizon of 90 days Liquidity Services is expected to generate 0.12 times more return on investment than Kidpik Corp. However, Liquidity Services is 8.17 times less risky than Kidpik Corp. It trades about -0.01 of its potential returns per unit of risk. Kidpik Corp is currently generating about -0.18 per unit of risk. If you would invest  3,247  in Liquidity Services on December 29, 2024 and sell it today you would lose (108.00) from holding Liquidity Services or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.49%
Values	Daily Returns

Liquidity Services  vs.  Kidpik Corp

Liquidity Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liquidity Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Liquidity Services is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kidpik Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kidpik Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Liquidity Services and Kidpik Corp

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

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.