Correlation Between Organic Meat and AKD Hospitality

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

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

Diversification Opportunities for Organic Meat and AKD Hospitality

0.05

Correlation Coefficient

Organic Meat  AKD Hospitality

Significant diversification

The 3 months correlation between Organic and AKD is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Organic Meat and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Organic Meat 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 The Organic Meat 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 Organic Meat i.e., Organic Meat and AKD Hospitality go up and down completely randomly.

Pair Corralation between Organic Meat and AKD Hospitality

Assuming the 90 days trading horizon The Organic Meat is expected to under-perform the AKD Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, The Organic Meat is 1.14 times less risky than AKD Hospitality. The stock trades about -0.08 of its potential returns per unit of risk. The AKD Hospitality is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  13,862  in AKD Hospitality on September 13, 2024 and sell it today you would earn a total of  1,999  from holding AKD Hospitality or generate 14.42% return on investment over 90 days.

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

The Organic Meat  vs.  AKD Hospitality

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.

AKD Hospitality

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AKD Hospitality are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, AKD Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Organic Meat and AKD Hospitality

The main advantage of trading using opposite Organic Meat and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Organic Meat 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 The Organic Meat 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.