Correlation Between Hi Tech and AKD Hospitality
Can any of the company-specific risk be diversified away by investing in both Hi Tech and AKD Hospitality 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 Hi Tech and AKD Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Lubricants and AKD Hospitality, you can compare the effects of market volatilities on Hi Tech and AKD Hospitality 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 Hi Tech with a short position of AKD Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and AKD Hospitality.
Diversification Opportunities for Hi Tech and AKD Hospitality
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HTL and AKD is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Hi Tech 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 Hi Tech Lubricants are associated (or correlated) with AKD Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKD Hospitality has no effect on the direction of Hi Tech i.e., Hi Tech and AKD Hospitality go up and down completely randomly.
Pair Corralation between Hi Tech and AKD Hospitality
Assuming the 90 days trading horizon Hi Tech Lubricants is expected to under-perform the AKD Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Hi Tech Lubricants is 1.4 times less risky than AKD Hospitality. The stock trades about -0.12 of its potential returns per unit of risk. The AKD Hospitality is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,901 in AKD Hospitality on October 26, 2024 and sell it today you would earn a total of 655.00 from holding AKD Hospitality or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Tech Lubricants vs. AKD Hospitality
Performance |
| Timeline |
| Hi Tech Lubricants |
| AKD Hospitality |
Hi Tech and AKD Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and AKD Hospitality
The main advantage of trading using opposite Hi Tech and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, AKD Hospitality 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 AKD Hospitality will offset losses from the drop in AKD Hospitality's long position.| Hi Tech vs. Reliance Insurance Co | Hi Tech vs. Soneri Bank | Hi Tech vs. TPL Insurance | Hi Tech vs. Adamjee Insurance |
| AKD Hospitality vs. ITTEFAQ Iron Industries | AKD Hospitality vs. TPL Insurance | AKD Hospitality vs. Crescent Star Insurance | AKD Hospitality vs. Ghandhara Automobile |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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