Correlation Between Lakshmi Finance and Infosys
Can any of the company-specific risk be diversified away by investing in both Lakshmi Finance and Infosys 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 Infosys 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 Infosys Limited, you can compare the effects of market volatilities on Lakshmi Finance and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakshmi Finance and Infosys.
Diversification Opportunities for Lakshmi Finance and Infosys
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lakshmi and Infosys is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lakshmi Finance Industrial and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of Lakshmi Finance i.e., Lakshmi Finance and Infosys go up and down completely randomly.
Pair Corralation between Lakshmi Finance and Infosys
Assuming the 90 days trading horizon Lakshmi Finance Industrial is expected to generate 2.58 times more return on investment than Infosys. However, Lakshmi Finance is 2.58 times more volatile than Infosys Limited. It trades about 0.05 of its potential returns per unit of risk. Infosys Limited is currently generating about 0.03 per unit of risk. If you would invest 11,418 in Lakshmi Finance Industrial on October 30, 2024 and sell it today you would earn a total of 7,800 from holding Lakshmi Finance Industrial or generate 68.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Lakshmi Finance Industrial vs. Infosys Limited
Performance |
| Timeline |
| Lakshmi Finance Indu |
| Infosys Limited |
Lakshmi Finance and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakshmi Finance and Infosys
The main advantage of trading using opposite Lakshmi Finance and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakshmi Finance position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| Lakshmi Finance vs. Gokul Refoils and | Lakshmi Finance vs. Radiant Cash Management | Lakshmi Finance vs. Ratnamani Metals Tubes | Lakshmi Finance vs. Modi Rubber Limited |
| Infosys vs. Thirumalai Chemicals Limited | Infosys vs. Kingfa Science Technology | Infosys vs. JB Chemicals Pharmaceuticals | Infosys vs. Dharani SugarsChemicals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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