Correlation Between AKRO and POLY

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Can any of the company-specific risk be diversified away by investing in both AKRO and POLY 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 POLY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKRO and POLY, you can compare the effects of market volatilities on AKRO and POLY 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 POLY. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKRO and POLY.

Diversification Opportunities for AKRO and POLY

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AKRO and POLY is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding AKRO and POLY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLY 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 POLY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLY has no effect on the direction of AKRO i.e., AKRO and POLY go up and down completely randomly.

Pair Corralation between AKRO and POLY

Assuming the 90 days trading horizon AKRO is expected to generate 19.02 times less return on investment than POLY. But when comparing it to its historical volatility, AKRO is 12.32 times less risky than POLY. It trades about 0.12 of its potential returns per unit of risk. POLY is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  11.00  in POLY on December 30, 2023 and sell it today you would lose (6.10) from holding POLY or give up 55.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AKRO  vs.  POLY

 Performance 
       Timeline  
AKRO 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AKRO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, AKRO exhibited solid returns over the last few months and may actually be approaching a breakup point.
POLY 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in POLY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, POLY exhibited solid returns over the last few months and may actually be approaching a breakup point.

AKRO and POLY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AKRO and POLY

The main advantage of trading using opposite AKRO and POLY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKRO position performs unexpectedly, POLY 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 POLY will offset losses from the drop in POLY's long position.
The idea behind AKRO and POLY 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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