Correlation Between AKD Hospitality and ITTEFAQ Iron

Can any of the company-specific risk be diversified away by investing in both AKD Hospitality and ITTEFAQ Iron 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 ITTEFAQ Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AKD Hospitality and ITTEFAQ Iron Industries, you can compare the effects of market volatilities on AKD Hospitality and ITTEFAQ Iron 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 ITTEFAQ Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and ITTEFAQ Iron.

Diversification Opportunities for AKD Hospitality and ITTEFAQ Iron

0.67

Correlation Coefficient

AKD Hospitality  ITTEFAQ Iron

Poor diversification

The 3 months correlation between AKD and ITTEFAQ is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and ITTEFAQ Iron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITTEFAQ Iron Industries 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 ITTEFAQ Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITTEFAQ Iron Industries has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and ITTEFAQ Iron go up and down completely randomly.

Pair Corralation between AKD Hospitality and ITTEFAQ Iron

Assuming the 90 days trading horizon AKD Hospitality is expected to generate 0.93 times more return on investment than ITTEFAQ Iron. However, AKD Hospitality is 1.07 times less risky than ITTEFAQ Iron. It trades about -0.01 of its potential returns per unit of risk. ITTEFAQ Iron Industries is currently generating about -0.01 per unit of risk. If you would invest  14,011  in AKD Hospitality on August 30, 2024 and sell it today you would lose (399.00) from holding AKD Hospitality or give up 2.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

AKD Hospitality  vs.  ITTEFAQ Iron Industries

AKD Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AKD Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, AKD Hospitality is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ITTEFAQ Iron Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITTEFAQ Iron Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, ITTEFAQ Iron is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AKD Hospitality and ITTEFAQ Iron

The main advantage of trading using opposite AKD Hospitality and ITTEFAQ Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality position performs unexpectedly, ITTEFAQ Iron 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 ITTEFAQ Iron will offset losses from the drop in ITTEFAQ Iron's long position.

The idea behind AKD Hospitality and ITTEFAQ Iron Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.