Correlation Between Athira Pharma and Akero Therapeutics

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

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

Diversification Opportunities for Athira Pharma and Akero Therapeutics

0.43

Correlation Coefficient

Athira Pharma  Akero Therapeutics

Very weak diversification

The 3 months correlation between Athira and Akero is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Athira Pharma and Akero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akero Therapeutics and Athira Pharma 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 Athira Pharma are associated (or correlated) with Akero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akero Therapeutics has no effect on the direction of Athira Pharma i.e., Athira Pharma and Akero Therapeutics go up and down completely randomly.

Pair Corralation between Athira Pharma and Akero Therapeutics

Given the investment horizon of 90 days Athira Pharma is expected to generate 2.57 times more return on investment than Akero Therapeutics. However, Athira Pharma is 2.57 times more volatile than Akero Therapeutics. It trades about 0.11 of its potential returns per unit of risk. Akero Therapeutics is currently generating about -0.03 per unit of risk. If you would invest  42.00  in Athira Pharma on October 10, 2024 and sell it today you would earn a total of  18.00  from holding Athira Pharma or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Athira Pharma  vs.  Akero Therapeutics

Athira Pharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Athira Pharma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Athira Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Akero Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akero Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Akero Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Athira Pharma and Akero Therapeutics

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

The idea behind Athira Pharma and Akero 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.