Correlation Between Indian Oil and Lemon Tree
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By analyzing existing cross correlation between Indian Oil and Lemon Tree Hotels, you can compare the effects of market volatilities on Indian Oil 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 Indian Oil with a short position of Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and Lemon Tree.
Diversification Opportunities for Indian Oil and Lemon Tree
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indian and Lemon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil 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 Indian Oil 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 Indian Oil 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 Indian Oil i.e., Indian Oil and Lemon Tree go up and down completely randomly.
Pair Corralation between Indian Oil and Lemon Tree
Assuming the 90 days trading horizon Indian Oil is expected to under-perform the Lemon Tree. In addition to that, Indian Oil is 1.1 times more volatile than Lemon Tree Hotels. It trades about -0.4 of its total potential returns per unit of risk. Lemon Tree Hotels is currently generating about 0.22 per unit of volatility. If you would invest 11,623 in Lemon Tree Hotels on August 25, 2024 and sell it today you would earn a total of 877.00 from holding Lemon Tree Hotels or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Indian Oil vs. Lemon Tree Hotels
Performance |
| Timeline |
| Indian Oil |
| Lemon Tree Hotels |
Indian Oil and Lemon Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Oil and Lemon Tree
The main advantage of trading using opposite Indian Oil and Lemon Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil 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.| Indian Oil vs. Adroit Infotech Limited | Indian Oil vs. Entertainment Network Limited | Indian Oil vs. Radiant Cash Management | Indian Oil vs. Newgen Software Technologies |
| Lemon Tree vs. Reliance Industries Limited | Lemon Tree vs. Indian Oil | Lemon Tree vs. HDFC Bank Limited | Lemon Tree vs. Divis Laboratories 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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