Correlation Between Generic Engineering and Lakshmi Precision
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By analyzing existing cross correlation between Generic Engineering Construction and Lakshmi Precision Screws, you can compare the effects of market volatilities on Generic Engineering and Lakshmi Precision 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 Generic Engineering with a short position of Lakshmi Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Engineering and Lakshmi Precision.
Diversification Opportunities for Generic Engineering and Lakshmi Precision
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Generic and Lakshmi is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Lakshmi Precision Screws in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakshmi Precision Screws and Generic Engineering 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 Generic Engineering Construction are associated (or correlated) with Lakshmi Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakshmi Precision Screws has no effect on the direction of Generic Engineering i.e., Generic Engineering and Lakshmi Precision go up and down completely randomly.
Pair Corralation between Generic Engineering and Lakshmi Precision
Assuming the 90 days trading horizon Generic Engineering Construction is expected to generate 0.87 times more return on investment than Lakshmi Precision. However, Generic Engineering Construction is 1.15 times less risky than Lakshmi Precision. It trades about 0.13 of its potential returns per unit of risk. Lakshmi Precision Screws is currently generating about -0.27 per unit of risk. If you would invest 3,709 in Generic Engineering Construction on August 27, 2024 and sell it today you would earn a total of 273.00 from holding Generic Engineering Construction or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generic Engineering Constructi vs. Lakshmi Precision Screws
Performance |
| Timeline |
| Generic Engineering |
| Lakshmi Precision Screws |
Generic Engineering and Lakshmi Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generic Engineering and Lakshmi Precision
The main advantage of trading using opposite Generic Engineering and Lakshmi Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Engineering position performs unexpectedly, Lakshmi Precision 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 Lakshmi Precision will offset losses from the drop in Lakshmi Precision's long position.The idea behind Generic Engineering Construction and Lakshmi Precision Screws 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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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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