Correlation Between AKD Hospitality and Organic Meat

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

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

Diversification Opportunities for AKD Hospitality and Organic Meat

0.09

Correlation Coefficient

AKD Hospitality  Organic Meat

Significant diversification

The 3 months correlation between AKD and Organic is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and The Organic Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Meat 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 Organic Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Meat has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and Organic Meat go up and down completely randomly.

Pair Corralation between AKD Hospitality and Organic Meat

Assuming the 90 days trading horizon AKD Hospitality is expected to generate 1.1 times more return on investment than Organic Meat. However, AKD Hospitality is 1.1 times more volatile than The Organic Meat. It trades about 0.05 of its potential returns per unit of risk. The Organic Meat is currently generating about -0.09 per unit of risk. If you would invest  14,198  in AKD Hospitality on September 12, 2024 and sell it today you would earn a total of  804.00  from holding AKD Hospitality or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

AKD Hospitality  vs.  The Organic Meat

AKD Hospitality

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AKD Hospitality are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, AKD Hospitality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Organic Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Organic Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with AKD Hospitality and Organic Meat

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

The idea behind AKD Hospitality and The Organic Meat 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.