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
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indian and Lemon is -0.05. 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. But the stock apears to be less risky and, when comparing its historical volatility, Indian Oil is 1.03 times less risky than Lemon Tree. The stock trades about -0.05 of its potential returns per unit of risk. The Lemon Tree Hotels is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13,515 in Lemon Tree Hotels on November 3, 2024 and sell it today you would earn a total of 105.00 from holding Lemon Tree Hotels or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| 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. Praxis Home Retail | Indian Oil vs. Transport of | Indian Oil vs. Vidhi Specialty Food | Indian Oil vs. Jayant Agro Organics |
| Lemon Tree vs. Varun Beverages Limited | Lemon Tree vs. Vinati Organics Limited | Lemon Tree vs. Som Distilleries Breweries | Lemon Tree vs. ADF Foods 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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