Correlation Between Prothena Plc and Akero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Prothena Plc 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 Prothena Plc and Akero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prothena plc and Akero Therapeutics, you can compare the effects of market volatilities on Prothena Plc 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 Prothena Plc with a short position of Akero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prothena Plc and Akero Therapeutics.
Diversification Opportunities for Prothena Plc and Akero Therapeutics
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prothena and Akero is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Prothena plc and Akero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akero Therapeutics and Prothena Plc 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 Prothena plc 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 Prothena Plc i.e., Prothena Plc and Akero Therapeutics go up and down completely randomly.
Pair Corralation between Prothena Plc and Akero Therapeutics
Given the investment horizon of 90 days Prothena plc is expected to under-perform the Akero Therapeutics. In addition to that, Prothena Plc is 1.41 times more volatile than Akero Therapeutics. It trades about -0.21 of its total potential returns per unit of risk. Akero Therapeutics is currently generating about -0.1 per unit of volatility. If you would invest 3,304 in Akero Therapeutics on September 12, 2024 and sell it today you would lose (269.00) from holding Akero Therapeutics or give up 8.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prothena plc vs. Akero Therapeutics
Performance |
| Timeline |
| Prothena plc |
| Akero Therapeutics |
Prothena Plc and Akero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prothena Plc and Akero Therapeutics
The main advantage of trading using opposite Prothena Plc and Akero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prothena Plc 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.| Prothena Plc vs. Equillium | Prothena Plc vs. DiaMedica Therapeutics | Prothena Plc vs. Valneva SE ADR | Prothena Plc vs. Vivani Medical |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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