Correlation Between Osmosis and AKRO
Can any of the company-specific risk be diversified away by investing in both Osmosis and AKRO 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 Osmosis and AKRO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Osmosis and AKRO, you can compare the effects of market volatilities on Osmosis and AKRO 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 Osmosis with a short position of AKRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osmosis and AKRO.
Diversification Opportunities for Osmosis and AKRO
Very poor diversification
The 3 months correlation between Osmosis and AKRO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Osmosis and AKRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKRO and Osmosis 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 Osmosis are associated (or correlated) with AKRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKRO has no effect on the direction of Osmosis i.e., Osmosis and AKRO go up and down completely randomly.
Pair Corralation between Osmosis and AKRO
Assuming the 90 days trading horizon Osmosis is expected to under-perform the AKRO. But the crypto coin apears to be less risky and, when comparing its historical volatility, Osmosis is 1.26 times less risky than AKRO. The crypto coin trades about -0.46 of its potential returns per unit of risk. The AKRO is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 0.05 in AKRO on November 8, 2024 and sell it today you would lose (0.01) from holding AKRO or give up 17.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Osmosis vs. AKRO
Performance |
| Timeline |
| Osmosis |
| AKRO |
Osmosis and AKRO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Osmosis and AKRO
The main advantage of trading using opposite Osmosis and AKRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osmosis position performs unexpectedly, AKRO 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 AKRO will offset losses from the drop in AKRO's long position.The idea behind Osmosis and AKRO 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.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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