Correlation Between AKRO and Osmosis
Can any of the company-specific risk be diversified away by investing in both AKRO and Osmosis 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 AKRO and Osmosis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKRO and Osmosis, you can compare the effects of market volatilities on AKRO and Osmosis 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 AKRO with a short position of Osmosis. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKRO and Osmosis.
Diversification Opportunities for AKRO and Osmosis
Very poor diversification
The 3 months correlation between AKRO and Osmosis is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AKRO and Osmosis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osmosis and AKRO 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 AKRO are associated (or correlated) with Osmosis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osmosis has no effect on the direction of AKRO i.e., AKRO and Osmosis go up and down completely randomly.
Pair Corralation between AKRO and Osmosis
Assuming the 90 days trading horizon AKRO is expected to under-perform the Osmosis. In addition to that, AKRO is 1.36 times more volatile than Osmosis. It trades about -0.02 of its total potential returns per unit of risk. Osmosis is currently generating about -0.02 per unit of volatility. If you would invest 103.00 in Osmosis on November 10, 2024 and sell it today you would lose (74.00) from holding Osmosis or give up 71.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKRO vs. Osmosis
Performance |
| Timeline |
| AKRO |
| Osmosis |
AKRO and Osmosis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKRO and Osmosis
The main advantage of trading using opposite AKRO and Osmosis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKRO position performs unexpectedly, Osmosis 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 Osmosis will offset losses from the drop in Osmosis' long position.The idea behind AKRO and Osmosis 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stocks Directory Find actively traded stocks across global markets |