Correlation Between Akebia Ther and Protalix Biotherapeutics

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

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

Diversification Opportunities for Akebia Ther and Protalix Biotherapeutics

0.13

Correlation Coefficient

Akebia Ther  Protalix Biotherapeutics

Average diversification

The 3 months correlation between Akebia and Protalix is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Akebia Ther and Protalix Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protalix Biotherapeutics and Akebia Ther 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 Akebia Ther are associated (or correlated) with Protalix Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protalix Biotherapeutics has no effect on the direction of Akebia Ther i.e., Akebia Ther and Protalix Biotherapeutics go up and down completely randomly.

Pair Corralation between Akebia Ther and Protalix Biotherapeutics

Given the investment horizon of 90 days Akebia Ther is expected to generate 1.72 times more return on investment than Protalix Biotherapeutics. However, Akebia Ther is 1.72 times more volatile than Protalix Biotherapeutics. It trades about 0.07 of its potential returns per unit of risk. Protalix Biotherapeutics is currently generating about 0.02 per unit of risk. If you would invest  38.00  in Akebia Ther on February 4, 2024 and sell it today you would earn a total of  99.00  from holding Akebia Ther or generate 260.53% return on investment over 90 days.

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

Akebia Ther  vs.  Protalix Biotherapeutics

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.

Protalix Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protalix Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Akebia Ther and Protalix Biotherapeutics

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

The idea behind Akebia Ther and Protalix Biotherapeutics 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.