Correlation Between United Insurance and AKD Hospitality
Can any of the company-specific risk be diversified away by investing in both United Insurance 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 United Insurance and AKD Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance and AKD Hospitality, you can compare the effects of market volatilities on United Insurance 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 United Insurance with a short position of AKD Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and AKD Hospitality.
Diversification Opportunities for United Insurance and AKD Hospitality
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and AKD is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and United Insurance 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 United Insurance 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 United Insurance i.e., United Insurance and AKD Hospitality go up and down completely randomly.
Pair Corralation between United Insurance and AKD Hospitality
Assuming the 90 days trading horizon United Insurance is expected to generate 8.9 times less return on investment than AKD Hospitality. But when comparing it to its historical volatility, United Insurance is 3.76 times less risky than AKD Hospitality. It trades about 0.04 of its potential returns per unit of risk. AKD Hospitality is currently generating about 0.1 of returns per unit of risk over similar time horizon. 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 |
United Insurance vs. AKD Hospitality
Performance |
| Timeline |
| United Insurance |
| AKD Hospitality |
United Insurance and AKD Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and AKD Hospitality
The main advantage of trading using opposite United Insurance and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance 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.| United Insurance vs. Habib Bank | United Insurance vs. National Bank of | United Insurance vs. United Bank | United Insurance vs. MCB Bank |
| AKD Hospitality vs. Habib Insurance | AKD Hospitality vs. Century Insurance | AKD Hospitality vs. Reliance Weaving Mills | AKD Hospitality vs. Media Times |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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