Correlation Between AKRO and ITC

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

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

Diversification Opportunities for AKRO and ITC

-0.44

Correlation Coefficient

AKRO  ITC

Very good diversification

The 3 months correlation between AKRO and ITC is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding AKRO and ITC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITC and AKRO 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 AKRO are associated (or correlated) with ITC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITC has no effect on the direction of AKRO i.e., AKRO and ITC go up and down completely randomly.

Pair Corralation between AKRO and ITC

If you would invest  0.46  in AKRO on August 30, 2024 and sell it today you would lose (0.01) from holding AKRO or give up 2.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

AKRO  vs.  ITC

AKRO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AKRO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, AKRO is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ITC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ITC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AKRO and ITC

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

The idea behind AKRO and ITC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.