Correlation Between Akebia Ther and Seres Therapeutics

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

By analyzing existing cross correlation between Akebia Ther and Seres Therapeutics, you can compare the effects of market volatilities on Akebia Ther and Seres 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 Akebia Ther with a short position of Seres Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akebia Ther and Seres Therapeutics.

Diversification Opportunities for Akebia Ther and Seres Therapeutics

0.01

Correlation Coefficient

Akebia Ther  Seres Therapeutics

Significant diversification

The 3 months correlation between Akebia and Seres is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Akebia Ther and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics and Akebia Ther 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 Akebia Ther are associated (or correlated) with Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of Akebia Ther i.e., Akebia Ther and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Akebia Ther and Seres Therapeutics

Given the investment horizon of 90 days Akebia Ther is expected to generate 1.35 times more return on investment than Seres Therapeutics. However, Akebia Ther is 1.35 times more volatile than Seres Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Seres Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  185.00  in Akebia Ther on December 28, 2024 and sell it today you would earn a total of  8.00  from holding Akebia Ther or generate 4.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Akebia Ther  vs.  Seres Therapeutics

Akebia Ther

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Akebia Ther are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Akebia Ther sustained solid returns over the last few months and may actually be approaching a breakup point.

Seres Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seres Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Akebia Ther and Seres Therapeutics

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

The idea behind Akebia Ther and Seres Therapeutics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..