Correlation Between Lux Industries and Elgi Rubber
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By analyzing existing cross correlation between Lux Industries Limited and Elgi Rubber, you can compare the effects of market volatilities on Lux Industries and Elgi Rubber 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 Lux Industries with a short position of Elgi Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lux Industries and Elgi Rubber.
Diversification Opportunities for Lux Industries and Elgi Rubber
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lux and Elgi is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lux Industries Limited and Elgi Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elgi Rubber and Lux Industries 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 Lux Industries Limited are associated (or correlated) with Elgi Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elgi Rubber has no effect on the direction of Lux Industries i.e., Lux Industries and Elgi Rubber go up and down completely randomly.
Pair Corralation between Lux Industries and Elgi Rubber
Assuming the 90 days trading horizon Lux Industries is expected to generate 5.8 times less return on investment than Elgi Rubber. But when comparing it to its historical volatility, Lux Industries Limited is 1.6 times less risky than Elgi Rubber. It trades about 0.02 of its potential returns per unit of risk. Elgi Rubber is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,525 in Elgi Rubber on September 3, 2024 and sell it today you would earn a total of 7,722 from holding Elgi Rubber or generate 219.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Lux Industries Limited vs. Elgi Rubber
Performance |
| Timeline |
| Lux Industries |
| Elgi Rubber |
Lux Industries and Elgi Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lux Industries and Elgi Rubber
The main advantage of trading using opposite Lux Industries and Elgi Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lux Industries position performs unexpectedly, Elgi Rubber 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 Elgi Rubber will offset losses from the drop in Elgi Rubber's long position.| Lux Industries vs. Elgi Rubber | Lux Industries vs. Avonmore Capital Management | Lux Industries vs. LLOYDS METALS AND | Lux Industries vs. Coffee Day Enterprises |
| Elgi Rubber vs. Bajaj Holdings Investment | Elgi Rubber vs. Shipping | Elgi Rubber vs. Indo Borax Chemicals | Elgi Rubber vs. Kingfa Science Technology |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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