Correlation Between Lemon Tree and HEG
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By analyzing existing cross correlation between Lemon Tree Hotels and HEG Limited, you can compare the effects of market volatilities on Lemon Tree and HEG 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 Lemon Tree with a short position of HEG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemon Tree and HEG.
Diversification Opportunities for Lemon Tree and HEG
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lemon and HEG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lemon Tree Hotels and HEG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEG Limited and Lemon Tree 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 Lemon Tree Hotels are associated (or correlated) with HEG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEG Limited has no effect on the direction of Lemon Tree i.e., Lemon Tree and HEG go up and down completely randomly.
Pair Corralation between Lemon Tree and HEG
Assuming the 90 days trading horizon Lemon Tree Hotels is expected to generate 0.91 times more return on investment than HEG. However, Lemon Tree Hotels is 1.1 times less risky than HEG. It trades about -0.14 of its potential returns per unit of risk. HEG Limited is currently generating about -0.39 per unit of risk. If you would invest 15,334 in Lemon Tree Hotels on October 23, 2024 and sell it today you would lose (1,146) from holding Lemon Tree Hotels or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemon Tree Hotels vs. HEG Limited
Performance |
| Timeline |
| Lemon Tree Hotels |
| HEG Limited |
Lemon Tree and HEG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemon Tree and HEG
The main advantage of trading using opposite Lemon Tree and HEG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemon Tree position performs unexpectedly, HEG 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 HEG will offset losses from the drop in HEG's long position.| Lemon Tree vs. Reliance Industries Limited | Lemon Tree vs. Life Insurance | Lemon Tree vs. Indian Oil | Lemon Tree vs. Oil Natural Gas |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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