Correlation Between Day One and Akero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Day One 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 Day One and Akero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Day One Biopharmaceuticals and Akero Therapeutics, you can compare the effects of market volatilities on Day One 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 Day One with a short position of Akero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Day One and Akero Therapeutics.
Diversification Opportunities for Day One and Akero Therapeutics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Day and Akero is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Day One Biopharmaceuticals and Akero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akero Therapeutics and Day One 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 Day One Biopharmaceuticals 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 Day One i.e., Day One and Akero Therapeutics go up and down completely randomly.
Pair Corralation between Day One and Akero Therapeutics
Given the investment horizon of 90 days Day One Biopharmaceuticals is expected to under-perform the Akero Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Day One Biopharmaceuticals is 1.37 times less risky than Akero Therapeutics. The stock trades about -0.11 of its potential returns per unit of risk. The Akero Therapeutics is currently generating about 0.1 of returns per unit of risk over similar time horizon. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Day One Biopharmaceuticals vs. Akero Therapeutics
Performance |
| Timeline |
| Day One Biopharmaceu |
| Akero Therapeutics |
Day One and Akero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Day One and Akero Therapeutics
The main advantage of trading using opposite Day One and Akero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Day One 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.| Day One vs. Eliem Therapeutics | Day One vs. HCW Biologics | Day One vs. Scpharmaceuticals | Day One vs. Milestone Pharmaceuticals |
| Akero Therapeutics vs. Eliem Therapeutics | Akero Therapeutics vs. HCW Biologics | Akero Therapeutics vs. Scpharmaceuticals | Akero Therapeutics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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