Correlation Between AKD Hospitality and TPL Insurance
Can any of the company-specific risk be diversified away by investing in both AKD Hospitality and TPL Insurance 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 TPL Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKD Hospitality and TPL Insurance, you can compare the effects of market volatilities on AKD Hospitality and TPL Insurance 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 TPL Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and TPL Insurance.
Diversification Opportunities for AKD Hospitality and TPL Insurance
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AKD and TPL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and TPL Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL 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 TPL Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPL Insurance has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and TPL Insurance go up and down completely randomly.
Pair Corralation between AKD Hospitality and TPL Insurance
Assuming the 90 days trading horizon AKD Hospitality is expected to under-perform the TPL Insurance. But the stock apears to be less risky and, when comparing its historical volatility, AKD Hospitality is 1.11 times less risky than TPL Insurance. The stock trades about -0.02 of its potential returns per unit of risk. The TPL Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 959.00 in TPL Insurance on August 30, 2024 and sell it today you would earn a total of 45.00 from holding TPL Insurance or generate 4.69% 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. TPL Insurance
Performance |
| Timeline |
| AKD Hospitality |
| TPL Insurance |
AKD Hospitality and TPL Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKD Hospitality and TPL Insurance
The main advantage of trading using opposite AKD Hospitality and TPL Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality position performs unexpectedly, TPL Insurance 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 TPL Insurance will offset losses from the drop in TPL Insurance's long position.| AKD Hospitality vs. Crescent Steel Allied | AKD Hospitality vs. Reliance Insurance Co | AKD Hospitality vs. International Steels | AKD Hospitality vs. Bank of Punjab |
| TPL Insurance vs. Masood Textile Mills | TPL Insurance vs. Fauji Foods | TPL Insurance vs. KSB Pumps | TPL Insurance vs. Mari Petroleum |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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