Correlation Between Lemon Tree and Sapphire Foods
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By analyzing existing cross correlation between Lemon Tree Hotels and Sapphire Foods India, you can compare the effects of market volatilities on Lemon Tree and Sapphire Foods 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 Sapphire Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemon Tree and Sapphire Foods.
Diversification Opportunities for Lemon Tree and Sapphire Foods
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lemon and Sapphire is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lemon Tree Hotels and Sapphire Foods India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapphire Foods India 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 Sapphire Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapphire Foods India has no effect on the direction of Lemon Tree i.e., Lemon Tree and Sapphire Foods go up and down completely randomly.
Pair Corralation between Lemon Tree and Sapphire Foods
Assuming the 90 days trading horizon Lemon Tree Hotels is expected to under-perform the Sapphire Foods. In addition to that, Lemon Tree is 1.26 times more volatile than Sapphire Foods India. It trades about -0.17 of its total potential returns per unit of risk. Sapphire Foods India is currently generating about -0.18 per unit of volatility. If you would invest 33,065 in Sapphire Foods India on October 28, 2024 and sell it today you would lose (2,530) from holding Sapphire Foods India or give up 7.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemon Tree Hotels vs. Sapphire Foods India
Performance |
| Timeline |
| Lemon Tree Hotels |
| Sapphire Foods India |
Lemon Tree and Sapphire Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemon Tree and Sapphire Foods
The main advantage of trading using opposite Lemon Tree and Sapphire Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemon Tree position performs unexpectedly, Sapphire Foods 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 Sapphire Foods will offset losses from the drop in Sapphire Foods' long position.| Lemon Tree vs. UTI Asset Management | Lemon Tree vs. Mask Investments Limited | Lemon Tree vs. Transport of | Lemon Tree vs. Rajnandini Metal Limited |
| Sapphire Foods vs. Tainwala Chemical and | Sapphire Foods vs. Computer Age Management | Sapphire Foods vs. JB Chemicals Pharmaceuticals | Sapphire Foods vs. IOL Chemicals and |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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