Correlation Between Mari Petroleum and AKD Hospitality

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

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

Diversification Opportunities for Mari Petroleum and AKD Hospitality

0.84

Correlation Coefficient

Mari Petroleum  AKD Hospitality

Very poor diversification

The 3 months correlation between Mari and AKD is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and Mari Petroleum 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 Mari Petroleum 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 Mari Petroleum i.e., Mari Petroleum and AKD Hospitality go up and down completely randomly.

Pair Corralation between Mari Petroleum and AKD Hospitality

Assuming the 90 days trading horizon Mari Petroleum is expected to generate 1.76 times more return on investment than AKD Hospitality. However, Mari Petroleum is 1.76 times more volatile than AKD Hospitality. It trades about 0.12 of its potential returns per unit of risk. AKD Hospitality is currently generating about 0.04 per unit of risk. If you would invest  3,183  in Mari Petroleum on September 29, 2024 and sell it today you would earn a total of  65,802  from holding Mari Petroleum or generate 2067.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	67.56%
Values	Daily Returns

Mari Petroleum  vs.  AKD Hospitality

Mari Petroleum

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mari Petroleum are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mari Petroleum sustained solid returns over the last few months and may actually be approaching a breakup point.

AKD Hospitality

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AKD Hospitality are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, AKD Hospitality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mari Petroleum and AKD Hospitality

The main advantage of trading using opposite Mari Petroleum and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum 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 Mari Petroleum 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.