Correlation Between AKD Hospitality and Gatron Industries
Can any of the company-specific risk be diversified away by investing in both AKD Hospitality and Gatron Industries 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 Gatron Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKD Hospitality and Gatron Industries, you can compare the effects of market volatilities on AKD Hospitality and Gatron Industries 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 Gatron Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and Gatron Industries.
Diversification Opportunities for AKD Hospitality and Gatron Industries
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AKD and Gatron is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron Industries 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 Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and Gatron Industries go up and down completely randomly.
Pair Corralation between AKD Hospitality and Gatron Industries
Assuming the 90 days trading horizon AKD Hospitality is expected to generate 1.38 times more return on investment than Gatron Industries. However, AKD Hospitality is 1.38 times more volatile than Gatron Industries. It trades about -0.01 of its potential returns per unit of risk. Gatron Industries is currently generating about -0.25 per unit of risk. If you would invest 15,199 in AKD Hospitality on December 30, 2024 and sell it today you would lose (435.00) from holding AKD Hospitality or give up 2.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 84.13% |
Values | Daily Returns |
AKD Hospitality vs. Gatron Industries
Performance |
Timeline |
AKD Hospitality |
Gatron Industries |
AKD Hospitality and Gatron Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AKD Hospitality and Gatron Industries
The main advantage of trading using opposite AKD Hospitality and Gatron Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality position performs unexpectedly, Gatron Industries 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 Gatron Industries will offset losses from the drop in Gatron Industries' long position.AKD Hospitality vs. Air Link Communication | AKD Hospitality vs. Invest Capital Investment | AKD Hospitality vs. Century Insurance | AKD Hospitality vs. Mughal Iron Steel |
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Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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