Correlation Between XAS and AKRO

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

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

Diversification Opportunities for XAS and AKRO

-0.37

Correlation Coefficient

XAS  AKRO

Very good diversification

The 3 months correlation between XAS and AKRO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding XAS and AKRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKRO and XAS 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 XAS 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 XAS i.e., XAS and AKRO go up and down completely randomly.

Pair Corralation between XAS and AKRO

If you would invest  5.25  in XAS on January 29, 2024 and sell it today you would earn a total of  0.00  from holding XAS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

XAS  vs.  AKRO

XAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XAS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, XAS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AKRO

Risk-Adjusted Performance

6 of 100

Modest

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.

Pair Trading with XAS and AKRO

The main advantage of trading using opposite XAS and AKRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XAS 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 XAS 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.