Correlation Between Century Paper and AKD Hospitality

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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

CenturyAKDDiversified AwayCenturyAKDDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Century Paper Board  vs.  AKD Hospitality

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030
JavaScript chart by amCharts 3.21.15CEPB AKDHL
       Timeline  
Century Paper Board 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Century Paper Board are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Century Paper sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan262830323436
AKD Hospitality 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AKD Hospitality are ranked lower than 6 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan130135140145150155160165

Century Paper and AKD Hospitality Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.65-7.23-4.81-2.380.02.444.967.489.9912.51 0.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15CEPB AKDHL
       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.
The idea behind Century Paper Board 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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