Correlation Between Invest Capital and AKD Hospitality

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

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

Diversification Opportunities for Invest Capital and AKD Hospitality

0.45

Correlation Coefficient

Invest Capital  AKD Hospitality

Very weak diversification

The 3 months correlation between Invest and AKD is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Invest Capital Investment and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Invest Capital 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 Invest Capital Investment 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 Invest Capital i.e., Invest Capital and AKD Hospitality go up and down completely randomly.

Pair Corralation between Invest Capital and AKD Hospitality

Assuming the 90 days trading horizon Invest Capital Investment is expected to under-perform the AKD Hospitality. In addition to that, Invest Capital is 1.24 times more volatile than AKD Hospitality. It trades about -0.06 of its total potential returns per unit of risk. AKD Hospitality is currently generating about -0.01 per unit of volatility. 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

Invest Capital Investment  vs.  AKD Hospitality

Invest Capital Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invest Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Invest Capital and AKD Hospitality

The main advantage of trading using opposite Invest Capital and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invest Capital 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 Invest Capital Investment 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.