Correlation Between Kidpik Corp and Solo Brands

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

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

Diversification Opportunities for Kidpik Corp and Solo Brands

-0.1

Correlation Coefficient

Kidpik Corp  Solo Brands

Good diversification

The 3 months correlation between Kidpik and Solo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kidpik Corp and Solo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solo Brands 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 Solo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solo Brands has no effect on the direction of Kidpik Corp i.e., Kidpik Corp and Solo Brands go up and down completely randomly.

Pair Corralation between Kidpik Corp and Solo Brands

Considering the 90-day investment horizon Kidpik Corp is expected to generate 1.29 times more return on investment than Solo Brands. However, Kidpik Corp is 1.29 times more volatile than Solo Brands. It trades about 0.02 of its potential returns per unit of risk. Solo Brands is currently generating about -0.01 per unit of risk. If you would invest  224.00  in Kidpik Corp on August 31, 2024 and sell it today you would lose (2.00) from holding Kidpik Corp or give up 0.89% of portfolio value over 90 days.

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

Kidpik Corp  vs.  Solo Brands

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.

Solo Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solo Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Solo Brands is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kidpik Corp and Solo Brands

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

The idea behind Kidpik Corp and Solo Brands 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.