Correlation Between Akero Therapeutics and Biomea Fusion
Can any of the company-specific risk be diversified away by investing in both Akero Therapeutics and Biomea Fusion 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 Akero Therapeutics and Biomea Fusion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akero Therapeutics and Biomea Fusion, you can compare the effects of market volatilities on Akero Therapeutics and Biomea Fusion 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 Akero Therapeutics with a short position of Biomea Fusion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akero Therapeutics and Biomea Fusion.
Diversification Opportunities for Akero Therapeutics and Biomea Fusion
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Akero and Biomea is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Akero Therapeutics and Biomea Fusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomea Fusion and Akero Therapeutics 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 Akero Therapeutics are associated (or correlated) with Biomea Fusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomea Fusion has no effect on the direction of Akero Therapeutics i.e., Akero Therapeutics and Biomea Fusion go up and down completely randomly.
Pair Corralation between Akero Therapeutics and Biomea Fusion
Given the investment horizon of 90 days Akero Therapeutics is expected to generate 0.79 times more return on investment than Biomea Fusion. However, Akero Therapeutics is 1.26 times less risky than Biomea Fusion. It trades about 0.1 of its potential returns per unit of risk. Biomea Fusion is currently generating about -0.51 per unit of risk. If you would invest 2,971 in Akero Therapeutics on August 28, 2024 and sell it today you would earn a total of 206.00 from holding Akero Therapeutics or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akero Therapeutics vs. Biomea Fusion
Performance |
| Timeline |
| Akero Therapeutics |
| Biomea Fusion |
Akero Therapeutics and Biomea Fusion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akero Therapeutics and Biomea Fusion
The main advantage of trading using opposite Akero Therapeutics and Biomea Fusion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akero Therapeutics position performs unexpectedly, Biomea Fusion 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 Biomea Fusion will offset losses from the drop in Biomea Fusion's long position.| Akero Therapeutics vs. Eliem Therapeutics | Akero Therapeutics vs. HCW Biologics | Akero Therapeutics vs. Scpharmaceuticals | Akero Therapeutics vs. Milestone Pharmaceuticals |
| Biomea Fusion vs. Eliem Therapeutics | Biomea Fusion vs. HCW Biologics | Biomea Fusion vs. Scpharmaceuticals | Biomea Fusion vs. Milestone Pharmaceuticals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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