Correlation Between LT Technology and Selan Exploration
Can any of the company-specific risk be diversified away by investing in both LT Technology and Selan Exploration 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 Selan Exploration 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 Selan Exploration Technology, you can compare the effects of market volatilities on LT Technology and Selan Exploration 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 Selan Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Technology and Selan Exploration.
Diversification Opportunities for LT Technology and Selan Exploration
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between LTTS and Selan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding LT Technology Services and Selan Exploration Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selan Exploration 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 Selan Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selan Exploration has no effect on the direction of LT Technology i.e., LT Technology and Selan Exploration go up and down completely randomly.
Pair Corralation between LT Technology and Selan Exploration
Assuming the 90 days trading horizon LT Technology Services is expected to generate 0.53 times more return on investment than Selan Exploration. However, LT Technology Services is 1.89 times less risky than Selan Exploration. It trades about -0.18 of its potential returns per unit of risk. Selan Exploration Technology is currently generating about -0.13 per unit of risk. If you would invest 525,860 in LT Technology Services on November 28, 2024 and sell it today you would lose (53,075) from holding LT Technology Services or give up 10.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LT Technology Services vs. Selan Exploration Technology
Performance |
| Timeline |
| LT Technology Services |
| Selan Exploration |
LT Technology and Selan Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LT Technology and Selan Exploration
The main advantage of trading using opposite LT Technology and Selan Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LT Technology position performs unexpectedly, Selan Exploration 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 Selan Exploration will offset losses from the drop in Selan Exploration's long position.| LT Technology vs. DiGiSPICE Technologies Limited | LT Technology vs. Alkali Metals Limited | LT Technology vs. Shyam Telecom Limited | LT Technology vs. Ortel Communications Limited |
| Selan Exploration vs. Jaypee Infratech Limited | Selan Exploration vs. Hexaware Technologies Limited | Selan Exploration vs. Le Travenues Technology | Selan Exploration vs. Usha Martin Education |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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