Correlation Between Legend Biotech and Akero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Legend Biotech 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 Legend Biotech and Akero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legend Biotech Corp and Akero Therapeutics, you can compare the effects of market volatilities on Legend Biotech 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 Legend Biotech with a short position of Akero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Akero Therapeutics.
Diversification Opportunities for Legend Biotech and Akero Therapeutics
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legend and Akero is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Akero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akero Therapeutics and Legend Biotech 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 Legend Biotech Corp 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 Legend Biotech i.e., Legend Biotech and Akero Therapeutics go up and down completely randomly.
Pair Corralation between Legend Biotech and Akero Therapeutics
Given the investment horizon of 90 days Legend Biotech Corp is expected to under-perform the Akero Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Legend Biotech Corp is 1.41 times less risky than Akero Therapeutics. The stock trades about -0.09 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Akero Therapeutics
Performance |
| Timeline |
| Legend Biotech Corp |
| Akero Therapeutics |
Legend Biotech and Akero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Akero Therapeutics
The main advantage of trading using opposite Legend Biotech and Akero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech 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.| Legend Biotech vs. Eliem Therapeutics | Legend Biotech vs. HCW Biologics | Legend Biotech vs. Scpharmaceuticals | Legend Biotech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |