Correlation Between Adamjee Insurance and AKD Hospitality
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and AKD Hospitality 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 Adamjee Insurance and AKD Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and AKD Hospitality, you can compare the effects of market volatilities on Adamjee Insurance and AKD Hospitality 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 Adamjee Insurance with a short position of AKD Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and AKD Hospitality.
Diversification Opportunities for Adamjee Insurance and AKD Hospitality
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adamjee and AKD is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Adamjee Insurance 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 Adamjee Insurance are associated (or correlated) with AKD Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKD Hospitality has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and AKD Hospitality go up and down completely randomly.
Pair Corralation between Adamjee Insurance and AKD Hospitality
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.52 times less return on investment than AKD Hospitality. But when comparing it to its historical volatility, Adamjee Insurance is 1.19 times less risky than AKD Hospitality. It trades about 0.06 of its potential returns per unit of risk. AKD Hospitality is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,901 in AKD Hospitality on October 26, 2024 and sell it today you would earn a total of 655.00 from holding AKD Hospitality or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. AKD Hospitality
Performance |
| Timeline |
| Adamjee Insurance |
| AKD Hospitality |
Adamjee Insurance and AKD Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and AKD Hospitality
The main advantage of trading using opposite Adamjee Insurance and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, AKD Hospitality 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 AKD Hospitality will offset losses from the drop in AKD Hospitality's long position.| Adamjee Insurance vs. Honda Atlas Cars | Adamjee Insurance vs. Invest Capital Investment | Adamjee Insurance vs. Air Link Communication | Adamjee Insurance vs. Data Agro |
| AKD Hospitality vs. ITTEFAQ Iron Industries | AKD Hospitality vs. TPL Insurance | AKD Hospitality vs. Crescent Star Insurance | AKD Hospitality vs. Ghandhara Automobile |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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