Correlation Between Biodexa Pharmaceticals and Akero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Biodexa Pharmaceticals and Akero Therapeutics 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 Biodexa Pharmaceticals and Akero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biodexa Pharmaceticals and Akero Therapeutics, you can compare the effects of market volatilities on Biodexa Pharmaceticals and Akero Therapeutics 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 Biodexa Pharmaceticals with a short position of Akero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biodexa Pharmaceticals and Akero Therapeutics.
Diversification Opportunities for Biodexa Pharmaceticals and Akero Therapeutics
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Biodexa and Akero is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Biodexa Pharmaceticals and Akero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akero Therapeutics and Biodexa Pharmaceticals 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 Biodexa Pharmaceticals are associated (or correlated) with Akero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akero Therapeutics has no effect on the direction of Biodexa Pharmaceticals i.e., Biodexa Pharmaceticals and Akero Therapeutics go up and down completely randomly.
Pair Corralation between Biodexa Pharmaceticals and Akero Therapeutics
Given the investment horizon of 90 days Biodexa Pharmaceticals is expected to under-perform the Akero Therapeutics. In addition to that, Biodexa Pharmaceticals is 3.48 times more volatile than Akero Therapeutics. It trades about -0.04 of its total potential returns per unit of risk. Akero Therapeutics is currently generating about 0.09 per unit of volatility. If you would invest 1,652 in Akero Therapeutics on August 24, 2024 and sell it today you would earn a total of 1,468 from holding Akero Therapeutics or generate 88.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biodexa Pharmaceticals vs. Akero Therapeutics
Performance |
| Timeline |
| Biodexa Pharmaceticals |
| Akero Therapeutics |
Biodexa Pharmaceticals and Akero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biodexa Pharmaceticals and Akero Therapeutics
The main advantage of trading using opposite Biodexa Pharmaceticals and Akero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biodexa Pharmaceticals position performs unexpectedly, Akero Therapeutics 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 Akero Therapeutics will offset losses from the drop in Akero Therapeutics' long position.The idea behind Biodexa Pharmaceticals and Akero Therapeutics 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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