Correlation Between Akari Therapeutics and Johnson Johnson

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

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

Diversification Opportunities for Akari Therapeutics and Johnson Johnson

-0.6

Correlation Coefficient

Akari Therapeutics  Johnson Johnson

Excellent diversification

The 3 months correlation between Akari and Johnson is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Akari Therapeutics PLC and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Akari Therapeutics 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 Akari Therapeutics PLC are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Akari Therapeutics i.e., Akari Therapeutics and Johnson Johnson go up and down completely randomly.

Pair Corralation between Akari Therapeutics and Johnson Johnson

Given the investment horizon of 90 days Akari Therapeutics PLC is expected to generate 6.26 times more return on investment than Johnson Johnson. However, Akari Therapeutics is 6.26 times more volatile than Johnson Johnson. It trades about 0.09 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.2 per unit of risk. If you would invest  97.00  in Akari Therapeutics PLC on December 20, 2024 and sell it today you would earn a total of  28.00  from holding Akari Therapeutics PLC or generate 28.87% return on investment over 90 days.

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

Akari Therapeutics PLC  vs.  Johnson Johnson

Akari Therapeutics PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Akari Therapeutics PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Akari Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Johnson Johnson

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Johnson Johnson revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Akari Therapeutics and Johnson Johnson

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

The idea behind Akari Therapeutics PLC and Johnson Johnson 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.