Correlation Between Natural Health and Kidpik Corp

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

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

Diversification Opportunities for Natural Health and Kidpik Corp

0.24

Correlation Coefficient

Natural Health  Kidpik Corp

Modest diversification

The 3 months correlation between Natural and Kidpik is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and Kidpik Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kidpik Corp and Natural Health 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 Natural Health Trend 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 Natural Health i.e., Natural Health and Kidpik Corp go up and down completely randomly.

Pair Corralation between Natural Health and Kidpik Corp

Given the investment horizon of 90 days Natural Health Trend is expected to generate 0.29 times more return on investment than Kidpik Corp. However, Natural Health Trend is 3.44 times less risky than Kidpik Corp. It trades about 0.14 of its potential returns per unit of risk. Kidpik Corp is currently generating about 0.0 per unit of risk. If you would invest  574.00  in Natural Health Trend on August 7, 2024 and sell it today you would earn a total of  25.00  from holding Natural Health Trend or generate 4.36% return on investment over 90 days.

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

Natural Health Trend  vs.  Kidpik Corp

Natural Health Trend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Kidpik Corp

Risk-Adjusted Performance

0 of 100

OK

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 newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Natural Health and Kidpik Corp

The main advantage of trading using opposite Natural Health and Kidpik Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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 Natural Health Trend 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..