Correlation Between MRF and Lakshmi Finance
Can any of the company-specific risk be diversified away by investing in both MRF and Lakshmi Finance 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 MRF and Lakshmi Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRF Limited and Lakshmi Finance Industrial, you can compare the effects of market volatilities on MRF and Lakshmi Finance 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 MRF with a short position of Lakshmi Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRF and Lakshmi Finance.
Diversification Opportunities for MRF and Lakshmi Finance
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MRF and Lakshmi is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MRF Limited and Lakshmi Finance Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakshmi Finance Indu and MRF 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 MRF Limited are associated (or correlated) with Lakshmi Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakshmi Finance Indu has no effect on the direction of MRF i.e., MRF and Lakshmi Finance go up and down completely randomly.
Pair Corralation between MRF and Lakshmi Finance
Assuming the 90 days trading horizon MRF is expected to generate 2.96 times less return on investment than Lakshmi Finance. But when comparing it to its historical volatility, MRF Limited is 3.32 times less risky than Lakshmi Finance. It trades about 0.05 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,255 in Lakshmi Finance Industrial on December 4, 2024 and sell it today you would earn a total of 6,131 from holding Lakshmi Finance Industrial or generate 59.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
MRF Limited vs. Lakshmi Finance Industrial
Performance |
| Timeline |
| MRF Limited |
| Lakshmi Finance Indu |
MRF and Lakshmi Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRF and Lakshmi Finance
The main advantage of trading using opposite MRF and Lakshmi Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRF position performs unexpectedly, Lakshmi Finance 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 Lakshmi Finance will offset losses from the drop in Lakshmi Finance's long position.| MRF vs. Hindustan Media Ventures | MRF vs. Welspun Investments and | MRF vs. Pilani Investment and | MRF vs. Kalyani Investment |
| Lakshmi Finance vs. TVS Electronics Limited | Lakshmi Finance vs. Gujarat Lease Financing | Lakshmi Finance vs. Teamlease Services Limited | Lakshmi Finance vs. Global Education 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |