Correlation Between Kidpik Corp and Alibaba Group

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

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

Diversification Opportunities for Kidpik Corp and Alibaba Group

-0.27

Correlation Coefficient

Kidpik Corp  Alibaba Group

Very good diversification

The 3 months correlation between Kidpik and Alibaba is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kidpik Corp and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Kidpik Corp 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 Kidpik Corp are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Kidpik Corp i.e., Kidpik Corp and Alibaba Group go up and down completely randomly.

Pair Corralation between Kidpik Corp and Alibaba Group

Considering the 90-day investment horizon Kidpik Corp is expected to generate 2.42 times more return on investment than Alibaba Group. However, Kidpik Corp is 2.42 times more volatile than Alibaba Group Holding. It trades about 0.02 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.02 per unit of risk. If you would invest  349.00  in Kidpik Corp on September 20, 2024 and sell it today you would lose (139.00) from holding Kidpik Corp or give up 39.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Kidpik Corp  vs.  Alibaba Group Holding

Kidpik Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kidpik Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Kidpik Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Alibaba Group Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Group Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alibaba Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kidpik Corp and Alibaba Group

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

The idea behind Kidpik Corp and Alibaba Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.