Correlation Between LT Foods and Indian Oil
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By analyzing existing cross correlation between LT Foods Limited and Indian Oil, you can compare the effects of market volatilities on LT Foods and Indian Oil 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 Indian Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Foods and Indian Oil.
Diversification Opportunities for LT Foods and Indian Oil
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LTFOODS and Indian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LT Foods Limited and Indian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Oil 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 Indian Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Oil has no effect on the direction of LT Foods i.e., LT Foods and Indian Oil go up and down completely randomly.
Pair Corralation between LT Foods and Indian Oil
Assuming the 90 days trading horizon LT Foods Limited is expected to generate 1.82 times more return on investment than Indian Oil. However, LT Foods is 1.82 times more volatile than Indian Oil. It trades about 0.08 of its potential returns per unit of risk. Indian Oil is currently generating about -0.1 per unit of risk. If you would invest 38,240 in LT Foods Limited on October 9, 2024 and sell it today you would earn a total of 2,435 from holding LT Foods Limited or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
LT Foods Limited vs. Indian Oil
Performance |
| Timeline |
| LT Foods Limited |
| Indian Oil |
LT Foods and Indian Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LT Foods and Indian Oil
The main advantage of trading using opposite LT Foods and Indian Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LT Foods position performs unexpectedly, Indian Oil 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 Indian Oil will offset losses from the drop in Indian Oil's long position.| LT Foods vs. Tata Consultancy Services | LT Foods vs. Quess Corp Limited | LT Foods vs. Reliance Industries Limited | LT Foods vs. Infosys Limited |
| Indian Oil vs. Modi Rubber Limited | Indian Oil vs. Som Distilleries Breweries | Indian Oil vs. Varun Beverages Limited | Indian Oil vs. Apollo Sindoori 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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