Correlation Between AKD Hospitality and EFU General
Can any of the company-specific risk be diversified away by investing in both AKD Hospitality and EFU General 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 EFU General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKD Hospitality and EFU General Insurance, you can compare the effects of market volatilities on AKD Hospitality and EFU General 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 EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and EFU General.
Diversification Opportunities for AKD Hospitality and EFU General
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AKD and EFU is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance 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 EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and EFU General go up and down completely randomly.
Pair Corralation between AKD Hospitality and EFU General
Assuming the 90 days trading horizon AKD Hospitality is expected to generate 2.82 times less return on investment than EFU General. But when comparing it to its historical volatility, AKD Hospitality is 1.0 times less risky than EFU General. It trades about 0.02 of its potential returns per unit of risk. EFU General Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11,601 in EFU General Insurance on November 3, 2024 and sell it today you would earn a total of 296.00 from holding EFU General Insurance or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKD Hospitality vs. EFU General Insurance
Performance |
| Timeline |
| AKD Hospitality |
| EFU General Insurance |
AKD Hospitality and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKD Hospitality and EFU General
The main advantage of trading using opposite AKD Hospitality and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality position performs unexpectedly, EFU General 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 EFU General will offset losses from the drop in EFU General's long position.| AKD Hospitality vs. Askari General Insurance | AKD Hospitality vs. Matco Foods | AKD Hospitality vs. Fauji Foods | AKD Hospitality vs. ORIX Leasing Pakistan |
| EFU General vs. Mughal Iron Steel | EFU General vs. Pakistan Telecommunication | EFU General vs. 786 Investment Limited | EFU General vs. Oil and Gas |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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