Correlation Between Optimism and AKRO

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

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

Diversification Opportunities for Optimism and AKRO

-0.57

Correlation Coefficient

Optimism  AKRO

Excellent diversification

The 3 months correlation between Optimism and AKRO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and AKRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKRO and Optimism 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 Optimism 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 Optimism i.e., Optimism and AKRO go up and down completely randomly.

Pair Corralation between Optimism and AKRO

Assuming the 90 days horizon Optimism is expected to generate 33.11 times less return on investment than AKRO. But when comparing it to its historical volatility, Optimism is 8.15 times less risky than AKRO. It trades about 0.04 of its potential returns per unit of risk. AKRO is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.01  in AKRO on April 21, 2025 and sell it today you would earn a total of  0.16  from holding AKRO or generate 1267.2% return on investment over 90 days.

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

Optimism  vs.  AKRO

Optimism

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Optimism are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Optimism exhibited solid returns over the last few months and may actually be approaching a breakup point.

AKRO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AKRO are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, AKRO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optimism and AKRO

The main advantage of trading using opposite Optimism and AKRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism 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 Optimism 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.