Correlation Between Acorn International and Build A

Can any of the company-specific risk be diversified away by investing in both Acorn International and Build A 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 Acorn International and Build A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acorn International and Build A Bear Workshop, you can compare the effects of market volatilities on Acorn International and Build A 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 Acorn International with a short position of Build A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acorn International and Build A.

Diversification Opportunities for Acorn International and Build A

0.0

Correlation Coefficient

Acorn International  Build A

Pay attention - limited upside

The 3 months correlation between Acorn and Build is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Acorn International and Build A Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build A Bear and Acorn International 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 Acorn International are associated (or correlated) with Build A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build A Bear has no effect on the direction of Acorn International i.e., Acorn International and Build A go up and down completely randomly.

Pair Corralation between Acorn International and Build A

If you would invest  2,148  in Build A Bear Workshop on January 24, 2024 and sell it today you would earn a total of  732.00  from holding Build A Bear Workshop or generate 34.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Acorn International  vs.  Build A Bear Workshop

Acorn International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Acorn International is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Build A Bear

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Build A Bear Workshop are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Build A showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acorn International and Build A

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

The idea behind Acorn International and Build A Bear Workshop 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.