Correlation Between Radware and Akoustis Technologies

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

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

Diversification Opportunities for Radware and Akoustis Technologies

-0.23

Correlation Coefficient

Radware  Akoustis Technologies

Very good diversification

The 3 months correlation between Radware and Akoustis is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Radware and Akoustis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akoustis Technologies and Radware 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 Radware are associated (or correlated) with Akoustis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akoustis Technologies has no effect on the direction of Radware i.e., Radware and Akoustis Technologies go up and down completely randomly.

Pair Corralation between Radware and Akoustis Technologies

Given the investment horizon of 90 days Radware is expected to generate 0.2 times more return on investment than Akoustis Technologies. However, Radware is 4.95 times less risky than Akoustis Technologies. It trades about 0.35 of its potential returns per unit of risk. Akoustis Technologies is currently generating about -0.32 per unit of risk. If you would invest  1,662  in Radware on February 21, 2024 and sell it today you would earn a total of  355.00  from holding Radware or generate 21.36% return on investment over 90 days.

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

Radware  vs.  Akoustis Technologies

Radware

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Radware reported solid returns over the last few months and may actually be approaching a breakup point.

Akoustis Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akoustis Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Radware and Akoustis Technologies

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

The idea behind Radware and Akoustis 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.