Correlation Between Akero Therapeutics and Royalty Pharma
Can any of the company-specific risk be diversified away by investing in both Akero Therapeutics and Royalty Pharma 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 Royalty Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akero Therapeutics and Royalty Pharma Plc, you can compare the effects of market volatilities on Akero Therapeutics and Royalty Pharma 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 Royalty Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akero Therapeutics and Royalty Pharma.
Diversification Opportunities for Akero Therapeutics and Royalty Pharma
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Akero and Royalty is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Akero Therapeutics and Royalty Pharma Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Pharma Plc 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 Royalty Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Pharma Plc has no effect on the direction of Akero Therapeutics i.e., Akero Therapeutics and Royalty Pharma go up and down completely randomly.
Pair Corralation between Akero Therapeutics and Royalty Pharma
Given the investment horizon of 90 days Akero Therapeutics is expected to generate 2.6 times more return on investment than Royalty Pharma. However, Akero Therapeutics is 2.6 times more volatile than Royalty Pharma Plc. It trades about 0.15 of its potential returns per unit of risk. Royalty Pharma Plc is currently generating about 0.02 per unit of risk. If you would invest 1,866 in Akero Therapeutics on August 27, 2024 and sell it today you would earn a total of 1,311 from holding Akero Therapeutics or generate 70.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akero Therapeutics vs. Royalty Pharma Plc
Performance |
| Timeline |
| Akero Therapeutics |
| Royalty Pharma Plc |
Akero Therapeutics and Royalty Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akero Therapeutics and Royalty Pharma
The main advantage of trading using opposite Akero Therapeutics and Royalty Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akero Therapeutics position performs unexpectedly, Royalty Pharma 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 Royalty Pharma will offset losses from the drop in Royalty Pharma's long position.| Akero Therapeutics vs. Eliem Therapeutics | Akero Therapeutics vs. HCW Biologics | Akero Therapeutics vs. Scpharmaceuticals | Akero Therapeutics vs. Milestone Pharmaceuticals |
| Royalty Pharma vs. Prime Medicine, Common | Royalty Pharma vs. Ginkgo Bioworks Holdings | Royalty Pharma vs. Ocean Biomedical | Royalty Pharma vs. Adaptive Biotechnologies Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |