Correlation Between Askari Bank and AKD Hospitality

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

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

Diversification Opportunities for Askari Bank and AKD Hospitality

0.72

Correlation Coefficient

Askari Bank  AKD Hospitality

Poor diversification

The 3 months correlation between Askari and AKD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Askari Bank and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Askari Bank 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 Askari Bank 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 Askari Bank i.e., Askari Bank and AKD Hospitality go up and down completely randomly.

Pair Corralation between Askari Bank and AKD Hospitality

Assuming the 90 days trading horizon Askari Bank is expected to under-perform the AKD Hospitality. In addition to that, Askari Bank is 1.62 times more volatile than AKD Hospitality. It trades about 0.0 of its total potential returns per unit of risk. AKD Hospitality is currently generating about 0.06 per unit of volatility. If you would invest  15,000  in AKD Hospitality on October 4, 2024 and sell it today you would earn a total of  359.00  from holding AKD Hospitality or generate 2.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Askari Bank  vs.  AKD Hospitality

Askari Bank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Askari Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Askari Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

AKD Hospitality

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AKD Hospitality are ranked lower than 5 (%) 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 Askari Bank and AKD Hospitality

The main advantage of trading using opposite Askari Bank and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari Bank 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 Askari Bank 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.