Correlation Between Lemon Tree and Tamilnad Mercantile
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By analyzing existing cross correlation between Lemon Tree Hotels and Tamilnad Mercantile Bank, you can compare the effects of market volatilities on Lemon Tree and Tamilnad Mercantile 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 Tamilnad Mercantile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemon Tree and Tamilnad Mercantile.
Diversification Opportunities for Lemon Tree and Tamilnad Mercantile
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lemon and Tamilnad is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lemon Tree Hotels and Tamilnad Mercantile Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamilnad Mercantile Bank 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 Tamilnad Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamilnad Mercantile Bank has no effect on the direction of Lemon Tree i.e., Lemon Tree and Tamilnad Mercantile go up and down completely randomly.
Pair Corralation between Lemon Tree and Tamilnad Mercantile
Assuming the 90 days trading horizon Lemon Tree Hotels is expected to generate 2.31 times more return on investment than Tamilnad Mercantile. However, Lemon Tree is 2.31 times more volatile than Tamilnad Mercantile Bank. It trades about -0.09 of its potential returns per unit of risk. Tamilnad Mercantile Bank is currently generating about -0.56 per unit of risk. If you would invest 14,666 in Lemon Tree Hotels on October 13, 2024 and sell it today you would lose (631.00) from holding Lemon Tree Hotels or give up 4.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemon Tree Hotels vs. Tamilnad Mercantile Bank
Performance |
| Timeline |
| Lemon Tree Hotels |
| Tamilnad Mercantile Bank |
Lemon Tree and Tamilnad Mercantile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemon Tree and Tamilnad Mercantile
The main advantage of trading using opposite Lemon Tree and Tamilnad Mercantile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemon Tree position performs unexpectedly, Tamilnad Mercantile 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 Tamilnad Mercantile will offset losses from the drop in Tamilnad Mercantile's long position.| Lemon Tree vs. Avonmore Capital Management | Lemon Tree vs. United Drilling Tools | Lemon Tree vs. UTI Asset Management | Lemon Tree vs. TECIL Chemicals and |
| Tamilnad Mercantile vs. PYRAMID TECHNOPLAST ORD | Tamilnad Mercantile vs. The Indian Hotels | Tamilnad Mercantile vs. Newgen Software Technologies | Tamilnad Mercantile vs. Lemon Tree Hotels |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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