Correlation Between Build A and Acorn International

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

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

Diversification Opportunities for Build A and Acorn International

0.0

Correlation Coefficient

Build A  Acorn International

Pay attention - limited upside

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

Pair Corralation between Build A and Acorn International

If you would invest  1,818  in Build A Bear Workshop on January 26, 2024 and sell it today you would earn a total of  1,158  from holding Build A Bear Workshop or generate 63.7% return on investment over 90 days.

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

Build A Bear Workshop  vs.  Acorn International

Build A Bear

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Build A Bear Workshop are ranked lower than 16 (%) 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.

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 newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Build A and Acorn International

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

The idea behind Build A Bear Workshop and Acorn International 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.