Correlation Between Akero Therapeutics and Predictive Technology
Can any of the company-specific risk be diversified away by investing in both Akero Therapeutics and Predictive Technology 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 Predictive Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akero Therapeutics and Predictive Technology Group, you can compare the effects of market volatilities on Akero Therapeutics and Predictive Technology 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 Predictive Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akero Therapeutics and Predictive Technology.
Diversification Opportunities for Akero Therapeutics and Predictive Technology
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Akero and Predictive is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Akero Therapeutics and Predictive Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predictive Technology 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 Predictive Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predictive Technology has no effect on the direction of Akero Therapeutics i.e., Akero Therapeutics and Predictive Technology go up and down completely randomly.
Pair Corralation between Akero Therapeutics and Predictive Technology
Given the investment horizon of 90 days Akero Therapeutics is expected to generate 44.05 times less return on investment than Predictive Technology. But when comparing it to its historical volatility, Akero Therapeutics is 29.01 times less risky than Predictive Technology. It trades about 0.07 of its potential returns per unit of risk. Predictive Technology Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Predictive Technology Group on September 4, 2024 and sell it today you would lose (0.02) from holding Predictive Technology Group or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akero Therapeutics vs. Predictive Technology Group
Performance |
| Timeline |
| Akero Therapeutics |
| Predictive Technology |
Akero Therapeutics and Predictive Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akero Therapeutics and Predictive Technology
The main advantage of trading using opposite Akero Therapeutics and Predictive Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akero Therapeutics position performs unexpectedly, Predictive Technology 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 Predictive Technology will offset losses from the drop in Predictive Technology's long position.| Akero Therapeutics vs. Terns Pharmaceuticals | Akero Therapeutics vs. Madrigal Pharmaceuticals | Akero Therapeutics vs. Inozyme Pharma | Akero Therapeutics vs. Viking Therapeutics |
| Predictive Technology vs. Viking Therapeutics | Predictive Technology vs. Terns Pharmaceuticals | Predictive Technology vs. Akero Therapeutics | Predictive Technology vs. Madrigal 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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