Correlation Between Evertec and Akamai Technologies

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

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

Diversification Opportunities for Evertec and Akamai Technologies

-0.22

Correlation Coefficient

Evertec  Akamai Technologies

Very good diversification

The 3 months correlation between Evertec and Akamai is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies and Evertec 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 Evertec are associated (or correlated) with Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of Evertec i.e., Evertec and Akamai Technologies go up and down completely randomly.

Pair Corralation between Evertec and Akamai Technologies

Given the investment horizon of 90 days Evertec is expected to under-perform the Akamai Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Evertec is 1.12 times less risky than Akamai Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Akamai Technologies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9,565  in Akamai Technologies on November 1, 2024 and sell it today you would earn a total of  551.00  from holding Akamai Technologies or generate 5.76% return on investment over 90 days.

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

Evertec  vs.  Akamai Technologies

Evertec

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Evertec and Akamai Technologies

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

The idea behind Evertec and Akamai Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.