Correlation Between AKD Hospitality and National Bank

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

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

Diversification Opportunities for AKD Hospitality and National Bank

0.1

Correlation Coefficient

AKD Hospitality  National Bank

Average diversification

The 3 months correlation between AKD and National is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of AKD Hospitality i.e., AKD Hospitality and National Bank go up and down completely randomly.

Pair Corralation between AKD Hospitality and National Bank

Assuming the 90 days trading horizon AKD Hospitality is expected to generate 0.73 times more return on investment than National Bank. However, AKD Hospitality is 1.36 times less risky than National Bank. It trades about -0.01 of its potential returns per unit of risk. National Bank of is currently generating about -0.16 per unit of risk. If you would invest  15,888  in AKD Hospitality on October 17, 2024 and sell it today you would lose (257.00) from holding AKD Hospitality or give up 1.62% of portfolio value over 90 days.

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

AKD Hospitality  vs.  National Bank of

AKD Hospitality

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AKD Hospitality are ranked lower than 11 (%) 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.

National Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, National Bank is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AKD Hospitality and National Bank

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

The idea behind AKD Hospitality and National Bank of 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.