Correlation Between Intel and Akero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Intel 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 Intel and Akero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Akero Therapeutics, you can compare the effects of market volatilities on Intel 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 Intel with a short position of Akero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Akero Therapeutics.
Diversification Opportunities for Intel and Akero Therapeutics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intel and Akero is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Akero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akero Therapeutics and Intel 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 Intel 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 Intel i.e., Intel and Akero Therapeutics go up and down completely randomly.
Pair Corralation between Intel and Akero Therapeutics
Given the investment horizon of 90 days Intel is expected to generate 1.41 times less return on investment than Akero Therapeutics. But when comparing it to its historical volatility, Intel is 1.14 times less risky than Akero Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Akero Therapeutics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,933 in Akero Therapeutics on August 26, 2024 and sell it today you would earn a total of 340.00 from holding Akero Therapeutics or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Akero Therapeutics
Performance |
| Timeline |
| Intel |
| Akero Therapeutics |
Intel and Akero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Akero Therapeutics
The main advantage of trading using opposite Intel and Akero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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.| Akero Therapeutics vs. Terns Pharmaceuticals | Akero Therapeutics vs. Madrigal Pharmaceuticals | Akero Therapeutics vs. Inozyme Pharma | Akero Therapeutics vs. Viking Therapeutics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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