Correlation Between AKD Hospitality and AGP

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

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

Diversification Opportunities for AKD Hospitality and AGP

-0.51

Correlation Coefficient

AKD Hospitality  AGP

Excellent diversification

The 3 months correlation between AKD and AGP is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and AGP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGP 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 AGP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGP has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and AGP go up and down completely randomly.

Pair Corralation between AKD Hospitality and AGP

Assuming the 90 days trading horizon AKD Hospitality is expected to under-perform the AGP. In addition to that, AKD Hospitality is 1.04 times more volatile than AGP. It trades about -0.02 of its total potential returns per unit of risk. AGP is currently generating about 0.13 per unit of volatility. If you would invest  16,349  in AGP on December 20, 2024 and sell it today you would earn a total of  2,860  from holding AGP or generate 17.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.1%
Values	Daily Returns

AKD Hospitality  vs.  AGP

AKD Hospitality

Risk-Adjusted Performance

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.

AGP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, AGP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AKD Hospitality and AGP

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

The idea behind AKD Hospitality and AGP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.