Correlation Between Checkpoint Therapeutics and Akebia Ther

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

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

Diversification Opportunities for Checkpoint Therapeutics and Akebia Ther

0.51

Correlation Coefficient

Checkpoint Therapeutics  Akebia Ther

Very weak diversification

The 3 months correlation between Checkpoint and Akebia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Checkpoint Therapeutics and Akebia Ther in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akebia Ther and Checkpoint Therapeutics 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 Checkpoint Therapeutics are associated (or correlated) with Akebia Ther. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akebia Ther has no effect on the direction of Checkpoint Therapeutics i.e., Checkpoint Therapeutics and Akebia Ther go up and down completely randomly.

Pair Corralation between Checkpoint Therapeutics and Akebia Ther

Given the investment horizon of 90 days Checkpoint Therapeutics is expected to under-perform the Akebia Ther. But the stock apears to be less risky and, when comparing its historical volatility, Checkpoint Therapeutics is 1.04 times less risky than Akebia Ther. The stock trades about -0.03 of its potential returns per unit of risk. The Akebia Ther is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Akebia Ther on February 21, 2024 and sell it today you would earn a total of  80.00  from holding Akebia Ther or generate 228.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Checkpoint Therapeutics  vs.  Akebia Ther

Checkpoint Therapeutics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Checkpoint Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Checkpoint Therapeutics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Akebia Ther

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akebia Ther has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Checkpoint Therapeutics and Akebia Ther

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

The idea behind Checkpoint Therapeutics and Akebia Ther 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.