Correlation Between AKD Hospitality and WorldCall Telecom

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

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

Diversification Opportunities for AKD Hospitality and WorldCall Telecom

0.52

Correlation Coefficient

AKD Hospitality  WorldCall Telecom

Very weak diversification

The 3 months correlation between AKD and WorldCall is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and WorldCall Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WorldCall Telecom 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 WorldCall Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WorldCall Telecom has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and WorldCall Telecom go up and down completely randomly.

Pair Corralation between AKD Hospitality and WorldCall Telecom

Assuming the 90 days trading horizon AKD Hospitality is expected to generate 1.32 times less return on investment than WorldCall Telecom. But when comparing it to its historical volatility, AKD Hospitality is 1.1 times less risky than WorldCall Telecom. It trades about 0.05 of its potential returns per unit of risk. WorldCall Telecom is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  134.00  in WorldCall Telecom on September 5, 2024 and sell it today you would earn a total of  13.00  from holding WorldCall Telecom or generate 9.7% return on investment over 90 days.

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

AKD Hospitality  vs.  WorldCall Telecom

AKD Hospitality

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AKD Hospitality are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, AKD Hospitality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WorldCall Telecom

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WorldCall Telecom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, WorldCall Telecom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AKD Hospitality and WorldCall Telecom

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

The idea behind AKD Hospitality and WorldCall Telecom 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.