Correlation Between AKD Hospitality and Lucky Cement
Can any of the company-specific risk be diversified away by investing in both AKD Hospitality and Lucky Cement 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 Lucky Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKD Hospitality and Lucky Cement, you can compare the effects of market volatilities on AKD Hospitality and Lucky Cement 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 Lucky Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and Lucky Cement.
Diversification Opportunities for AKD Hospitality and Lucky Cement
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AKD and Lucky is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and Lucky Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucky Cement 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 Lucky Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucky Cement has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and Lucky Cement go up and down completely randomly.
Pair Corralation between AKD Hospitality and Lucky Cement
Assuming the 90 days trading horizon AKD Hospitality is expected to generate 1.3 times less return on investment than Lucky Cement. In addition to that, AKD Hospitality is 2.22 times more volatile than Lucky Cement. It trades about 0.05 of its total potential returns per unit of risk. Lucky Cement is currently generating about 0.13 per unit of volatility. If you would invest 50,015 in Lucky Cement on September 2, 2024 and sell it today you would earn a total of 51,940 from holding Lucky Cement or generate 103.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.87% |
| Values | Daily Returns |
AKD Hospitality vs. Lucky Cement
Performance |
| Timeline |
| AKD Hospitality |
| Lucky Cement |
AKD Hospitality and Lucky Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKD Hospitality and Lucky Cement
The main advantage of trading using opposite AKD Hospitality and Lucky Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality position performs unexpectedly, Lucky Cement 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 Lucky Cement will offset losses from the drop in Lucky Cement's long position.| AKD Hospitality vs. Habib Insurance | AKD Hospitality vs. Century Insurance | AKD Hospitality vs. Reliance Weaving Mills | AKD Hospitality vs. Media Times |
| Lucky Cement vs. Big Bird Foods | Lucky Cement vs. Adamjee Insurance | Lucky Cement vs. United Insurance | Lucky Cement vs. Soneri Bank |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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