Correlation Between Kidpik Corp and Oriental Culture

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

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

Diversification Opportunities for Kidpik Corp and Oriental Culture

0.29

Correlation Coefficient

Kidpik Corp  Oriental Culture

Modest diversification

The 3 months correlation between Kidpik and Oriental is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kidpik Corp and Oriental Culture Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Culture 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 Oriental Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Culture Holding has no effect on the direction of Kidpik Corp i.e., Kidpik Corp and Oriental Culture go up and down completely randomly.

Pair Corralation between Kidpik Corp and Oriental Culture

Considering the 90-day investment horizon Kidpik Corp is expected to generate 0.95 times more return on investment than Oriental Culture. However, Kidpik Corp is 1.05 times less risky than Oriental Culture. It trades about 0.0 of its potential returns per unit of risk. Oriental Culture Holding is currently generating about -0.06 per unit of risk. If you would invest  237.00  in Kidpik Corp on September 1, 2024 and sell it today you would lose (10.00) from holding Kidpik Corp or give up 4.22% of portfolio value over 90 days.

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

Kidpik Corp  vs.  Oriental Culture Holding

Kidpik Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kidpik Corp are ranked lower than 2 (%) 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.

Oriental Culture Holding

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Kidpik Corp and Oriental Culture

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

The idea behind Kidpik Corp and Oriental Culture 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.