Correlation Between Akamai Technologies and Amdocs

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

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

Diversification Opportunities for Akamai Technologies and Amdocs

0.38

Correlation Coefficient

Akamai Technologies  Amdocs

Weak diversification

The 3 months correlation between Akamai and Amdocs is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies and Amdocs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs and Akamai Technologies 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 Akamai Technologies are associated (or correlated) with Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs has no effect on the direction of Akamai Technologies i.e., Akamai Technologies and Amdocs go up and down completely randomly.

Pair Corralation between Akamai Technologies and Amdocs

Given the investment horizon of 90 days Akamai Technologies is expected to under-perform the Amdocs. In addition to that, Akamai Technologies is 2.17 times more volatile than Amdocs. It trades about -0.1 of its total potential returns per unit of risk. Amdocs is currently generating about -0.04 per unit of volatility. If you would invest  8,863  in Amdocs on August 30, 2024 and sell it today you would lose (145.00) from holding Amdocs or give up 1.64% of portfolio value over 90 days.

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

Akamai Technologies  vs.  Amdocs

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Amdocs

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amdocs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amdocs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Akamai Technologies and Amdocs

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

The idea behind Akamai Technologies and Amdocs 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.