Correlation Between Akamai Technologies and ASPEN PHARUNADR

Can any of the company-specific risk be diversified away by investing in both Akamai Technologies and ASPEN PHARUNADR 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 Akamai Technologies and ASPEN PHARUNADR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Akamai Technologies and ASPEN PHARUNADR 1, you can compare the effects of market volatilities on Akamai Technologies and ASPEN PHARUNADR 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 Akamai Technologies with a short position of ASPEN PHARUNADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies and ASPEN PHARUNADR.

Diversification Opportunities for Akamai Technologies and ASPEN PHARUNADR

0.29

Correlation Coefficient

Akamai Technologies  ASPEN PHARUNADR

Modest diversification

The 3 months correlation between Akamai and ASPEN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies and ASPEN PHARUNADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN PHARUNADR 1 and Akamai Technologies 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 Akamai Technologies are associated (or correlated) with ASPEN PHARUNADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN PHARUNADR 1 has no effect on the direction of Akamai Technologies i.e., Akamai Technologies and ASPEN PHARUNADR go up and down completely randomly.

Pair Corralation between Akamai Technologies and ASPEN PHARUNADR

Assuming the 90 days trading horizon Akamai Technologies is expected to under-perform the ASPEN PHARUNADR. But the stock apears to be less risky and, when comparing its historical volatility, Akamai Technologies is 1.66 times less risky than ASPEN PHARUNADR. The stock trades about -0.08 of its potential returns per unit of risk. The ASPEN PHARUNADR 1 is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  875.00  in ASPEN PHARUNADR 1 on October 8, 2024 and sell it today you would lose (15.00) from holding ASPEN PHARUNADR 1 or give up 1.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Akamai Technologies  vs.  ASPEN PHARUNADR 1

Akamai Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Akamai Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ASPEN PHARUNADR 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASPEN PHARUNADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Akamai Technologies and ASPEN PHARUNADR

The main advantage of trading using opposite Akamai Technologies and ASPEN PHARUNADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akamai Technologies position performs unexpectedly, ASPEN PHARUNADR 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 ASPEN PHARUNADR will offset losses from the drop in ASPEN PHARUNADR's long position.

The idea behind Akamai Technologies and ASPEN PHARUNADR 1 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.