Correlation Between Bajaj Holdings and Lemon Tree
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By analyzing existing cross correlation between Bajaj Holdings Investment and Lemon Tree Hotels, you can compare the effects of market volatilities on Bajaj Holdings and Lemon Tree 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 Bajaj Holdings with a short position of Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bajaj Holdings and Lemon Tree.
Diversification Opportunities for Bajaj Holdings and Lemon Tree
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bajaj and Lemon is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Holdings Investment and Lemon Tree Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemon Tree Hotels and Bajaj Holdings 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 Bajaj Holdings Investment are associated (or correlated) with Lemon Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemon Tree Hotels has no effect on the direction of Bajaj Holdings i.e., Bajaj Holdings and Lemon Tree go up and down completely randomly.
Pair Corralation between Bajaj Holdings and Lemon Tree
Assuming the 90 days trading horizon Bajaj Holdings Investment is expected to generate 0.88 times more return on investment than Lemon Tree. However, Bajaj Holdings Investment is 1.13 times less risky than Lemon Tree. It trades about 0.08 of its potential returns per unit of risk. Lemon Tree Hotels is currently generating about 0.06 per unit of risk. If you would invest 577,075 in Bajaj Holdings Investment on October 26, 2024 and sell it today you would earn a total of 551,935 from holding Bajaj Holdings Investment or generate 95.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Bajaj Holdings Investment vs. Lemon Tree Hotels
Performance |
| Timeline |
| Bajaj Holdings Investment |
| Lemon Tree Hotels |
Bajaj Holdings and Lemon Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bajaj Holdings and Lemon Tree
The main advantage of trading using opposite Bajaj Holdings and Lemon Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bajaj Holdings position performs unexpectedly, Lemon Tree 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 Lemon Tree will offset losses from the drop in Lemon Tree's long position.| Bajaj Holdings vs. Reliance Industries Limited | Bajaj Holdings vs. Life Insurance | Bajaj Holdings vs. Indian Oil | Bajaj Holdings vs. Oil Natural Gas |
| Lemon Tree vs. State Bank of | Lemon Tree vs. Life Insurance | Lemon Tree vs. HDFC Bank Limited | Lemon Tree vs. ICICI Bank Limited |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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