Correlation Between Akamai Technologies and Ajinomoto Inc

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Can any of the company-specific risk be diversified away by investing in both Akamai Technologies and Ajinomoto Inc 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 Ajinomoto Inc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akamai Technologies and Ajinomoto Inc ADR, you can compare the effects of market volatilities on Akamai Technologies and Ajinomoto Inc 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 Ajinomoto Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies and Ajinomoto Inc.

Diversification Opportunities for Akamai Technologies and Ajinomoto Inc

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Akamai and Ajinomoto is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies and Ajinomoto Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajinomoto ADR 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 Ajinomoto Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajinomoto ADR has no effect on the direction of Akamai Technologies i.e., Akamai Technologies and Ajinomoto Inc go up and down completely randomly.

Pair Corralation between Akamai Technologies and Ajinomoto Inc

Given the investment horizon of 90 days Akamai Technologies is expected to under-perform the Ajinomoto Inc. In addition to that, Akamai Technologies is 1.15 times more volatile than Ajinomoto Inc ADR. It trades about -0.03 of its total potential returns per unit of risk. Ajinomoto Inc ADR is currently generating about 0.13 per unit of volatility. If you would invest  2,422  in Ajinomoto Inc ADR on August 29, 2022 and sell it today you would earn a total of  674.00  from holding Ajinomoto Inc ADR or generate 27.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Akamai Technologies  vs.  Ajinomoto Inc ADR

 Performance (%) 
       Timeline  
Akamai Technologies 
Akamai Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Akamai Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Akamai Technologies is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Akamai Price Channel

Ajinomoto ADR 
Ajinomoto Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ajinomoto Inc ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Ajinomoto Inc showed solid returns over the last few months and may actually be approaching a breakup point.

Ajinomoto Price Channel

Akamai Technologies and Ajinomoto Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Akamai Technologies and Ajinomoto Inc

The main advantage of trading using opposite Akamai Technologies and Ajinomoto Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akamai Technologies position performs unexpectedly, Ajinomoto Inc 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 Ajinomoto Inc will offset losses from the drop in Ajinomoto Inc's long position.
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The idea behind Akamai Technologies and Ajinomoto Inc ADR 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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