Correlation Between Industrial Investment and Lemon Tree
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By analyzing existing cross correlation between Industrial Investment Trust and Lemon Tree Hotels, you can compare the effects of market volatilities on Industrial Investment 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 Industrial Investment with a short position of Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Lemon Tree.
Diversification Opportunities for Industrial Investment and Lemon Tree
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Lemon is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust 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 Industrial Investment 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 Industrial Investment Trust 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 Industrial Investment i.e., Industrial Investment and Lemon Tree go up and down completely randomly.
Pair Corralation between Industrial Investment and Lemon Tree
Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 1.7 times more return on investment than Lemon Tree. However, Industrial Investment is 1.7 times more volatile than Lemon Tree Hotels. It trades about 0.32 of its potential returns per unit of risk. Lemon Tree Hotels is currently generating about 0.26 per unit of risk. If you would invest 34,170 in Industrial Investment Trust on September 2, 2024 and sell it today you would earn a total of 6,510 from holding Industrial Investment Trust or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Investment Trust vs. Lemon Tree Hotels
Performance |
| Timeline |
| Industrial Investment |
| Lemon Tree Hotels |
Industrial Investment and Lemon Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Investment and Lemon Tree
The main advantage of trading using opposite Industrial Investment and Lemon Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment 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.| Industrial Investment vs. State Bank of | Industrial Investment vs. Life Insurance | Industrial Investment vs. HDFC Bank Limited | Industrial Investment vs. ICICI Bank Limited |
| Lemon Tree vs. Indian Railway Finance | Lemon Tree vs. Cholamandalam Financial Holdings | Lemon Tree vs. Reliance Industries Limited | Lemon Tree vs. Tata Consultancy Services |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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