Correlation Between Fastly and BlockchainK2 Corp

Can any of the company-specific risk be diversified away by investing in both Fastly and BlockchainK2 Corp 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 Fastly and BlockchainK2 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fastly Inc and BlockchainK2 Corp, you can compare the effects of market volatilities on Fastly and BlockchainK2 Corp 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 Fastly with a short position of BlockchainK2 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastly and BlockchainK2 Corp.

Diversification Opportunities for Fastly and BlockchainK2 Corp

0.24

Correlation Coefficient

Fastly  BlockchainK2 Corp

Modest diversification

The 3 months correlation between Fastly and BlockchainK2 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and BlockchainK2 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlockchainK2 Corp and Fastly 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 Fastly Inc are associated (or correlated) with BlockchainK2 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlockchainK2 Corp has no effect on the direction of Fastly i.e., Fastly and BlockchainK2 Corp go up and down completely randomly.

Pair Corralation between Fastly and BlockchainK2 Corp

Given the investment horizon of 90 days Fastly Inc is expected to generate 0.45 times more return on investment than BlockchainK2 Corp. However, Fastly Inc is 2.21 times less risky than BlockchainK2 Corp. It trades about -0.12 of its potential returns per unit of risk. BlockchainK2 Corp is currently generating about -0.06 per unit of risk. If you would invest  1,017  in Fastly Inc on December 22, 2024 and sell it today you would lose (317.00) from holding Fastly Inc or give up 31.17% of portfolio value over 90 days.

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

Fastly Inc  vs.  BlockchainK2 Corp

Fastly Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastly Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BlockchainK2 Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlockchainK2 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fastly and BlockchainK2 Corp

The main advantage of trading using opposite Fastly and BlockchainK2 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastly position performs unexpectedly, BlockchainK2 Corp 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 BlockchainK2 Corp will offset losses from the drop in BlockchainK2 Corp's long position.

The idea behind Fastly Inc and BlockchainK2 Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.