Correlation Between Akero Therapeutics and Immunovant

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

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

Diversification Opportunities for Akero Therapeutics and Immunovant

-0.04

Correlation Coefficient

Akero Therapeutics  Immunovant

Good diversification

The 3 months correlation between Akero and Immunovant is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Akero Therapeutics and Immunovant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunovant and Akero 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 Akero Therapeutics are associated (or correlated) with Immunovant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunovant has no effect on the direction of Akero Therapeutics i.e., Akero Therapeutics and Immunovant go up and down completely randomly.

Pair Corralation between Akero Therapeutics and Immunovant

Given the investment horizon of 90 days Akero Therapeutics is expected to generate 2.1 times less return on investment than Immunovant. In addition to that, Akero Therapeutics is 1.37 times more volatile than Immunovant. It trades about 0.05 of its total potential returns per unit of risk. Immunovant is currently generating about 0.15 per unit of volatility. If you would invest  2,851  in Immunovant on July 30, 2024 and sell it today you would earn a total of  171.00  from holding Immunovant or generate 6.0% return on investment over 90 days.

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

Akero Therapeutics  vs.  Immunovant

Akero Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Akero Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Akero Therapeutics may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Immunovant

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Immunovant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Immunovant may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Akero Therapeutics and Immunovant

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

The idea behind Akero Therapeutics and Immunovant 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.