Correlation Between LT Foods and AksharChem India
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By analyzing existing cross correlation between LT Foods Limited and AksharChem India Limited, you can compare the effects of market volatilities on LT Foods and AksharChem India 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 LT Foods with a short position of AksharChem India. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Foods and AksharChem India.
Diversification Opportunities for LT Foods and AksharChem India
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LTFOODS and AksharChem is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LT Foods Limited and AksharChem India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AksharChem India and LT Foods 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 LT Foods Limited are associated (or correlated) with AksharChem India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AksharChem India has no effect on the direction of LT Foods i.e., LT Foods and AksharChem India go up and down completely randomly.
Pair Corralation between LT Foods and AksharChem India
Assuming the 90 days trading horizon LT Foods Limited is expected to generate 1.62 times more return on investment than AksharChem India. However, LT Foods is 1.62 times more volatile than AksharChem India Limited. It trades about 0.03 of its potential returns per unit of risk. AksharChem India Limited is currently generating about -0.06 per unit of risk. If you would invest 38,348 in LT Foods Limited on September 2, 2024 and sell it today you would earn a total of 1,362 from holding LT Foods Limited or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LT Foods Limited vs. AksharChem India Limited
Performance |
| Timeline |
| LT Foods Limited |
| AksharChem India |
LT Foods and AksharChem India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LT Foods and AksharChem India
The main advantage of trading using opposite LT Foods and AksharChem India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LT Foods position performs unexpectedly, AksharChem India 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 AksharChem India will offset losses from the drop in AksharChem India's long position.| LT Foods vs. Kingfa Science Technology | LT Foods vs. Rico Auto Industries | LT Foods vs. GACM Technologies Limited | LT Foods vs. COSMO FIRST LIMITED |
| AksharChem India vs. Sintex Plastics Technology | AksharChem India vs. NRB Industrial Bearings | AksharChem India vs. S P Apparels | AksharChem India vs. Agro Tech Foods |
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