Correlation Between Quice Food and AKD Hospitality

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

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

Diversification Opportunities for Quice Food and AKD Hospitality

0.61

Correlation Coefficient

Quice Food  AKD Hospitality

Poor diversification

The 3 months correlation between Quice and AKD is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Quice Food Industries and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Quice Food 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 Quice Food Industries 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 Quice Food i.e., Quice Food and AKD Hospitality go up and down completely randomly.

Pair Corralation between Quice Food and AKD Hospitality

Assuming the 90 days trading horizon Quice Food Industries is expected to under-perform the AKD Hospitality. In addition to that, Quice Food is 1.76 times more volatile than AKD Hospitality. It trades about -0.03 of its total potential returns per unit of risk. AKD Hospitality is currently generating about -0.01 per unit of volatility. 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

Quice Food Industries  vs.  AKD Hospitality

Quice Food Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quice Food Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with Quice Food and AKD Hospitality

The main advantage of trading using opposite Quice Food and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quice Food 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.

The idea behind Quice Food Industries and AKD Hospitality 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.