Correlation Between Flare and AKRO

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

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

Diversification Opportunities for Flare and AKRO

0.62

Correlation Coefficient

Flare  AKRO

Poor diversification

The 3 months correlation between Flare and AKRO is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Flare and AKRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKRO and Flare 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 Flare are associated (or correlated) with AKRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKRO has no effect on the direction of Flare i.e., Flare and AKRO go up and down completely randomly.

Pair Corralation between Flare and AKRO

Assuming the 90 days trading horizon Flare is expected to under-perform the AKRO. But the crypto coin apears to be less risky and, when comparing its historical volatility, Flare is 3.11 times less risky than AKRO. The crypto coin trades about -0.07 of its potential returns per unit of risk. The AKRO is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.67  in AKRO on January 26, 2024 and sell it today you would earn a total of  0.06  from holding AKRO or generate 8.74% return on investment over 90 days.

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

Flare  vs.  AKRO

Flare

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flare are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Flare exhibited solid returns over the last few months and may actually be approaching a breakup point.

AKRO

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AKRO are ranked lower than 8 (%) 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.

Pair Trading with Flare and AKRO

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

The idea behind Flare and AKRO 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.