Correlation Between LT Technology and Computer Age
Can any of the company-specific risk be diversified away by investing in both LT Technology and Computer Age 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 LT Technology and Computer Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LT Technology Services and Computer Age Management, you can compare the effects of market volatilities on LT Technology and Computer Age 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 Technology with a short position of Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Technology and Computer Age.
Diversification Opportunities for LT Technology and Computer Age
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LTTS and Computer is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LT Technology Services and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and LT Technology 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 Technology Services are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of LT Technology i.e., LT Technology and Computer Age go up and down completely randomly.
Pair Corralation between LT Technology and Computer Age
Assuming the 90 days trading horizon LT Technology is expected to generate 2.76 times less return on investment than Computer Age. But when comparing it to its historical volatility, LT Technology Services is 1.27 times less risky than Computer Age. It trades about 0.04 of its potential returns per unit of risk. Computer Age Management is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 211,042 in Computer Age Management on September 4, 2024 and sell it today you would earn a total of 299,188 from holding Computer Age Management or generate 141.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
LT Technology Services vs. Computer Age Management
Performance |
| Timeline |
| LT Technology Services |
| Computer Age Management |
LT Technology and Computer Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LT Technology and Computer Age
The main advantage of trading using opposite LT Technology and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LT Technology position performs unexpectedly, Computer Age 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 Computer Age will offset losses from the drop in Computer Age's long position.| LT Technology vs. HMT Limited | LT Technology vs. KIOCL Limited | LT Technology vs. Spentex Industries Limited | LT Technology vs. Punjab Sind Bank |
| Computer Age vs. HMT Limited | Computer Age vs. KIOCL Limited | Computer Age vs. Spentex Industries Limited | Computer Age vs. Punjab Sind Bank |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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