Correlation Between HDFC Bank and Lemon Tree
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By analyzing existing cross correlation between HDFC Bank Limited and Lemon Tree Hotels, you can compare the effects of market volatilities on HDFC Bank 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 HDFC Bank with a short position of Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Lemon Tree.
Diversification Opportunities for HDFC Bank and Lemon Tree
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HDFC and Lemon is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited 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 HDFC Bank 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 HDFC Bank Limited 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 HDFC Bank i.e., HDFC Bank and Lemon Tree go up and down completely randomly.
Pair Corralation between HDFC Bank and Lemon Tree
Assuming the 90 days trading horizon HDFC Bank is expected to generate 3.65 times less return on investment than Lemon Tree. But when comparing it to its historical volatility, HDFC Bank Limited is 1.21 times less risky than Lemon Tree. It trades about 0.11 of its potential returns per unit of risk. Lemon Tree Hotels is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 11,469 in Lemon Tree Hotels on August 28, 2024 and sell it today you would earn a total of 1,332 from holding Lemon Tree Hotels or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HDFC Bank Limited vs. Lemon Tree Hotels
Performance |
| Timeline |
| HDFC Bank Limited |
| Lemon Tree Hotels |
HDFC Bank and Lemon Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HDFC Bank and Lemon Tree
The main advantage of trading using opposite HDFC Bank and Lemon Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank 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.| HDFC Bank vs. LLOYDS METALS AND | HDFC Bank vs. Beta Drugs | HDFC Bank vs. Manaksia Coated Metals | HDFC Bank vs. Avonmore Capital Management |
| Lemon Tree vs. MMTC Limited | Lemon Tree vs. Kingfa Science Technology | Lemon Tree vs. Rico Auto Industries | Lemon Tree vs. GACM Technologies 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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