Correlation Between AKA Brands and Alibaba Group

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Can any of the company-specific risk be diversified away by investing in both AKA Brands 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 AKA Brands and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKA Brands Holding and Alibaba Group Holding, you can compare the effects of market volatilities on AKA Brands 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 AKA Brands with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKA Brands and Alibaba Group.

Diversification Opportunities for AKA Brands and Alibaba Group

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AKA Brands and Alibaba is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AKA Brands Holding 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 AKA Brands 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 AKA Brands Holding 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 AKA Brands i.e., AKA Brands and Alibaba Group go up and down completely randomly.

Pair Corralation between AKA Brands and Alibaba Group

Considering the 90-day investment horizon AKA Brands Holding is expected to generate 1.26 times more return on investment than Alibaba Group. However, AKA Brands is 1.26 times more volatile than Alibaba Group Holding. It trades about 0.13 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.07 per unit of risk. If you would invest  349.00  in AKA Brands Holding on February 26, 2022 and sell it today you would earn a total of  56.00  from holding AKA Brands Holding or generate 16.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AKA Brands Holding  vs.  Alibaba Group Holding

 Performance (%) 
      Timeline 
AKA Brands Holding 
AKA Brands Performance
0 of 100
Over the last 90 days AKA Brands Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

AKA Brands Price Channel

Alibaba Group Holding 
Alibaba Performance
0 of 100
Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Alibaba Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alibaba Price Channel

AKA Brands and Alibaba Group Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AKA Brands and Alibaba Group

The main advantage of trading using opposite AKA Brands and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKA Brands 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 AKA Brands Holding 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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