Correlation Between AKD Hospitality and Dost Steels
Can any of the company-specific risk be diversified away by investing in both AKD Hospitality and Dost Steels 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 AKD Hospitality and Dost Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKD Hospitality and Dost Steels, you can compare the effects of market volatilities on AKD Hospitality and Dost Steels 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 AKD Hospitality with a short position of Dost Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and Dost Steels.
Diversification Opportunities for AKD Hospitality and Dost Steels
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AKD and Dost is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and Dost Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dost Steels and AKD Hospitality 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 AKD Hospitality are associated (or correlated) with Dost Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dost Steels has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and Dost Steels go up and down completely randomly.
Pair Corralation between AKD Hospitality and Dost Steels
Assuming the 90 days trading horizon AKD Hospitality is expected to generate 1.31 times less return on investment than Dost Steels. In addition to that, AKD Hospitality is 1.11 times more volatile than Dost Steels. It trades about 0.11 of its total potential returns per unit of risk. Dost Steels is currently generating about 0.17 per unit of volatility. If you would invest 628.00 in Dost Steels on August 24, 2024 and sell it today you would earn a total of 69.00 from holding Dost Steels or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKD Hospitality vs. Dost Steels
Performance |
| Timeline |
| AKD Hospitality |
| Dost Steels |
AKD Hospitality and Dost Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKD Hospitality and Dost Steels
The main advantage of trading using opposite AKD Hospitality and Dost Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality position performs unexpectedly, Dost Steels 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 Dost Steels will offset losses from the drop in Dost Steels' long position.| AKD Hospitality vs. Habib Insurance | AKD Hospitality vs. Ghandhara Automobile | AKD Hospitality vs. Century Insurance | AKD Hospitality vs. Reliance Weaving Mills |
| Dost Steels vs. Oil and Gas | Dost Steels vs. Pakistan State Oil | Dost Steels vs. Pakistan Petroleum | Dost Steels vs. Engro |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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