Correlation Between Afterpay and Akamai Technologies

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

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

Diversification Opportunities for Afterpay and Akamai Technologies

0.0

Correlation Coefficient

Afterpay  Akamai Technologies

Pay attention - limited upside

The 3 months correlation between Afterpay and Akamai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Afterpay Limited and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies and Afterpay 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 Afterpay Limited are associated (or correlated) with Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of Afterpay i.e., Afterpay and Akamai Technologies go up and down completely randomly.

Pair Corralation between Afterpay and Akamai Technologies

If you would invest (100.00) in Afterpay Limited on September 27, 2024 and sell it today you would earn a total of  100.00  from holding Afterpay Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Afterpay Limited  vs.  Akamai Technologies

Afterpay Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afterpay Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Afterpay is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Akamai Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Akamai Technologies is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Afterpay and Akamai Technologies

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

The idea behind Afterpay Limited and Akamai 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..