Correlation Between AKD Hospitality and United Insurance
Can any of the company-specific risk be diversified away by investing in both AKD Hospitality and United 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 United 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 United Insurance, you can compare the effects of market volatilities on AKD Hospitality and United 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 United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and United Insurance.
Diversification Opportunities for AKD Hospitality and United Insurance
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AKD and United is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and United Insurance go up and down completely randomly.
Pair Corralation between AKD Hospitality and United Insurance
Assuming the 90 days trading horizon AKD Hospitality is expected to generate 3.76 times more return on investment than United Insurance. However, AKD Hospitality is 3.76 times more volatile than United Insurance. It trades about 0.1 of its potential returns per unit of risk. United Insurance is currently generating about 0.04 per unit of risk. If you would invest 13,303 in AKD Hospitality on September 2, 2024 and sell it today you would earn a total of 797.00 from holding AKD Hospitality or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKD Hospitality vs. United Insurance
Performance |
| Timeline |
| AKD Hospitality |
| United Insurance |
AKD Hospitality and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKD Hospitality and United Insurance
The main advantage of trading using opposite AKD Hospitality and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality position performs unexpectedly, United 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 United Insurance will offset losses from the drop in United Insurance's long position.| AKD Hospitality vs. Habib Insurance | AKD Hospitality vs. Century Insurance | AKD Hospitality vs. Reliance Weaving Mills | AKD Hospitality vs. Media Times |
| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United Insurance vs. MCB 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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