Correlation Between International Steels and AKD Hospitality
Can any of the company-specific risk be diversified away by investing in both International Steels 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 International Steels and AKD Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and AKD Hospitality, you can compare the effects of market volatilities on International Steels 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 International Steels with a short position of AKD Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and AKD Hospitality.
Diversification Opportunities for International Steels and AKD Hospitality
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between International and AKD is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and International Steels 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 International Steels 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 International Steels i.e., International Steels and AKD Hospitality go up and down completely randomly.
Pair Corralation between International Steels and AKD Hospitality
Assuming the 90 days trading horizon International Steels is expected to generate 0.82 times more return on investment than AKD Hospitality. However, International Steels is 1.22 times less risky than AKD Hospitality. It trades about 0.14 of its potential returns per unit of risk. AKD Hospitality is currently generating about 0.0 per unit of risk. If you would invest 6,273 in International Steels on August 30, 2024 and sell it today you would earn a total of 912.00 from holding International Steels or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Steels vs. AKD Hospitality
Performance |
| Timeline |
| International Steels |
| AKD Hospitality |
International Steels and AKD Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and AKD Hospitality
The main advantage of trading using opposite International Steels and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels 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.| International Steels vs. Oil and Gas | International Steels vs. Roshan Packages | International Steels vs. WorldCall Telecom | International Steels vs. Air Link Communication |
| AKD Hospitality vs. Crescent Steel Allied | AKD Hospitality vs. Reliance Insurance Co | AKD Hospitality vs. International Steels | AKD Hospitality vs. Bank of Punjab |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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