Correlation Between Lakshmi Finance and HMT
Can any of the company-specific risk be diversified away by investing in both Lakshmi Finance and HMT at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lakshmi Finance and HMT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakshmi Finance Industrial and HMT Limited, you can compare the effects of market volatilities on Lakshmi Finance and HMT 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 Lakshmi Finance with a short position of HMT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakshmi Finance and HMT.
Diversification Opportunities for Lakshmi Finance and HMT
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lakshmi and HMT is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lakshmi Finance Industrial and HMT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMT Limited and Lakshmi Finance 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 Lakshmi Finance Industrial are associated (or correlated) with HMT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMT Limited has no effect on the direction of Lakshmi Finance i.e., Lakshmi Finance and HMT go up and down completely randomly.
Pair Corralation between Lakshmi Finance and HMT
Assuming the 90 days trading horizon Lakshmi Finance Industrial is expected to under-perform the HMT. But the stock apears to be less risky and, when comparing its historical volatility, Lakshmi Finance Industrial is 1.31 times less risky than HMT. The stock trades about -0.14 of its potential returns per unit of risk. The HMT Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 7,091 in HMT Limited on September 12, 2024 and sell it today you would lose (169.00) from holding HMT Limited or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lakshmi Finance Industrial vs. HMT Limited
Performance |
| Timeline |
| Lakshmi Finance Indu |
| HMT Limited |
Lakshmi Finance and HMT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakshmi Finance and HMT
The main advantage of trading using opposite Lakshmi Finance and HMT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakshmi Finance position performs unexpectedly, HMT 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 HMT will offset losses from the drop in HMT's long position.| Lakshmi Finance vs. Yes Bank Limited | Lakshmi Finance vs. Indian Oil | Lakshmi Finance vs. Indo Borax Chemicals | Lakshmi Finance vs. Kingfa Science Technology |
| HMT vs. Praxis Home Retail | HMT vs. Lakshmi Finance Industrial | HMT vs. Agarwal Industrial | HMT vs. NRB Industrial Bearings |
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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