Correlation Between Akamai Technologies and Afterpay

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

By analyzing existing cross correlation between Akamai Technologies and Afterpay Limited, you can compare the effects of market volatilities on Akamai Technologies and Afterpay 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 Afterpay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies and Afterpay.

Diversification Opportunities for Akamai Technologies and Afterpay

0.0

Correlation Coefficient

Akamai Technologies  Afterpay

Pay attention - limited upside

The 3 months correlation between Akamai and Afterpay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies and Afterpay Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afterpay Limited 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 Afterpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afterpay Limited has no effect on the direction of Akamai Technologies i.e., Akamai Technologies and Afterpay go up and down completely randomly.

Pair Corralation between Akamai Technologies and Afterpay

If you would invest  8,596  in Akamai Technologies on September 18, 2024 and sell it today you would earn a total of  1,134  from holding Akamai Technologies or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Akamai Technologies  vs.  Afterpay Limited

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 very healthy basic indicators, Akamai Technologies is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Afterpay Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afterpay Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Afterpay is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Akamai Technologies and Afterpay

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

The idea behind Akamai Technologies and Afterpay Limited 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 Stocks Directory module to find actively traded stocks across global markets.