Correlation Between HMT and LT Technology
Can any of the company-specific risk be diversified away by investing in both HMT and LT Technology 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 HMT and LT Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMT Limited and LT Technology Services, you can compare the effects of market volatilities on HMT and LT Technology 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 HMT with a short position of LT Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMT and LT Technology.
Diversification Opportunities for HMT and LT Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HMT and LTTS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HMT Limited and LT Technology Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Technology Services and HMT 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 HMT Limited are associated (or correlated) with LT Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Technology Services has no effect on the direction of HMT i.e., HMT and LT Technology go up and down completely randomly.
Pair Corralation between HMT and LT Technology
Assuming the 90 days trading horizon HMT Limited is expected to under-perform the LT Technology. In addition to that, HMT is 1.54 times more volatile than LT Technology Services. It trades about -0.15 of its total potential returns per unit of risk. LT Technology Services is currently generating about -0.06 per unit of volatility. If you would invest 566,581 in LT Technology Services on September 4, 2024 and sell it today you would lose (38,891) from holding LT Technology Services or give up 6.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
HMT Limited vs. LT Technology Services
Performance |
| Timeline |
| HMT Limited |
| LT Technology Services |
HMT and LT Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMT and LT Technology
The main advantage of trading using opposite HMT and LT Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMT position performs unexpectedly, LT Technology 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 LT Technology will offset losses from the drop in LT Technology's long position.| HMT vs. Blue Jet Healthcare | HMT vs. Univa Foods Limited | HMT vs. Bikaji Foods International | HMT vs. Mrs Bectors Food |
| LT Technology vs. HMT Limited | LT Technology vs. KIOCL Limited | LT Technology vs. Spentex Industries Limited | LT Technology vs. Punjab Sind Bank |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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