Correlation Between KEY and AKRO

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

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

Diversification Opportunities for KEY and AKRO

0.44

Correlation Coefficient

KEY  AKRO

Very weak diversification

The 3 months correlation between KEY and AKRO is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KEY and AKRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKRO and KEY 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 KEY 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 KEY i.e., KEY and AKRO go up and down completely randomly.

Pair Corralation between KEY and AKRO

Assuming the 90 days trading horizon KEY is expected to under-perform the AKRO. In addition to that, KEY is 1.51 times more volatile than AKRO. It trades about -0.14 of its total potential returns per unit of risk. AKRO is currently generating about 0.05 per unit of volatility. If you would invest  0.45  in AKRO on September 1, 2024 and sell it today you would earn a total of  0.04  from holding AKRO or generate 9.8% return on investment over 90 days.

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

KEY  vs.  AKRO

KEY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for KEY shareholders.

AKRO

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AKRO are ranked lower than 4 (%) 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 KEY and AKRO

The main advantage of trading using opposite KEY and AKRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEY 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 KEY 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.