Correlation Between Lumia and Aarti Drugs
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By analyzing existing cross correlation between Lumia and Aarti Drugs Limited, you can compare the effects of market volatilities on Lumia and Aarti Drugs 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 Lumia with a short position of Aarti Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Aarti Drugs.
Diversification Opportunities for Lumia and Aarti Drugs
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lumia and Aarti is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Aarti Drugs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarti Drugs Limited and Lumia 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 Lumia are associated (or correlated) with Aarti Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarti Drugs Limited has no effect on the direction of Lumia i.e., Lumia and Aarti Drugs go up and down completely randomly.
Pair Corralation between Lumia and Aarti Drugs
Assuming the 90 days trading horizon Lumia is expected to under-perform the Aarti Drugs. In addition to that, Lumia is 2.2 times more volatile than Aarti Drugs Limited. It trades about -0.14 of its total potential returns per unit of risk. Aarti Drugs Limited is currently generating about -0.02 per unit of volatility. If you would invest 43,190 in Aarti Drugs Limited on October 20, 2024 and sell it today you would lose (1,100) from holding Aarti Drugs Limited or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lumia vs. Aarti Drugs Limited
Performance |
| Timeline |
| Lumia |
| Aarti Drugs Limited |
Lumia and Aarti Drugs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Aarti Drugs
The main advantage of trading using opposite Lumia and Aarti Drugs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Aarti Drugs 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 Aarti Drugs will offset losses from the drop in Aarti Drugs' long position.The idea behind Lumia and Aarti Drugs Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aarti Drugs vs. Mangalore Chemicals Fertilizers | Aarti Drugs vs. Shyam Telecom Limited | Aarti Drugs vs. Fertilizers and Chemicals | Aarti Drugs vs. Thirumalai Chemicals Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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