Correlation Between Century Paper and AKD Hospitality
Can any of the company-specific risk be diversified away by investing in both Century Paper 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 Century Paper and AKD Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Paper Board and AKD Hospitality, you can compare the effects of market volatilities on Century Paper 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 Century Paper with a short position of AKD Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Paper and AKD Hospitality.
Diversification Opportunities for Century Paper and AKD Hospitality
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and AKD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Century Paper Board and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Century Paper 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 Century Paper Board 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 Century Paper i.e., Century Paper and AKD Hospitality go up and down completely randomly.
Pair Corralation between Century Paper and AKD Hospitality
Assuming the 90 days trading horizon Century Paper Board is expected to generate 1.02 times more return on investment than AKD Hospitality. However, Century Paper is 1.02 times more volatile than AKD Hospitality. It trades about 0.08 of its potential returns per unit of risk. AKD Hospitality is currently generating about 0.08 per unit of risk. If you would invest 2,593 in Century Paper Board on October 27, 2024 and sell it today you would earn a total of 371.00 from holding Century Paper Board or generate 14.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Century Paper Board vs. AKD Hospitality
Performance |
Timeline |
Century Paper Board |
AKD Hospitality |
Century Paper and AKD Hospitality Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Century Paper and AKD Hospitality
The main advantage of trading using opposite Century Paper and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Paper 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.Century Paper vs. Roshan Packages | ||
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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