Correlation Between LT Technology and Samhi Hotels
Can any of the company-specific risk be diversified away by investing in both LT Technology and Samhi Hotels 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 Samhi Hotels 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 Samhi Hotels Limited, you can compare the effects of market volatilities on LT Technology and Samhi Hotels 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 Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Technology and Samhi Hotels.
Diversification Opportunities for LT Technology and Samhi Hotels
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LTTS and Samhi is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LT Technology Services and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited 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 Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of LT Technology i.e., LT Technology and Samhi Hotels go up and down completely randomly.
Pair Corralation between LT Technology and Samhi Hotels
Assuming the 90 days trading horizon LT Technology Services is expected to generate 0.81 times more return on investment than Samhi Hotels. However, LT Technology Services is 1.24 times less risky than Samhi Hotels. It trades about -0.02 of its potential returns per unit of risk. Samhi Hotels Limited is currently generating about -0.04 per unit of risk. If you would invest 537,869 in LT Technology Services on December 11, 2024 and sell it today you would lose (73,594) from holding LT Technology Services or give up 13.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LT Technology Services vs. Samhi Hotels Limited
Performance |
| Timeline |
| LT Technology Services |
| Samhi Hotels Limited |
LT Technology and Samhi Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LT Technology and Samhi Hotels
The main advantage of trading using opposite LT Technology and Samhi Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LT Technology position performs unexpectedly, Samhi Hotels 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 Samhi Hotels will offset losses from the drop in Samhi Hotels' long position.| LT Technology vs. Akums Drugs and | ||
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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