Correlation Between Royal Orchid and LT Foods
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By analyzing existing cross correlation between Royal Orchid Hotels and LT Foods Limited, you can compare the effects of market volatilities on Royal Orchid and LT Foods 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 Royal Orchid with a short position of LT Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Orchid and LT Foods.
Diversification Opportunities for Royal Orchid and LT Foods
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Royal and LTFOODS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Royal Orchid Hotels and LT Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Foods Limited and Royal Orchid 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 Royal Orchid Hotels are associated (or correlated) with LT Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Foods Limited has no effect on the direction of Royal Orchid i.e., Royal Orchid and LT Foods go up and down completely randomly.
Pair Corralation between Royal Orchid and LT Foods
Assuming the 90 days trading horizon Royal Orchid Hotels is expected to under-perform the LT Foods. But the stock apears to be less risky and, when comparing its historical volatility, Royal Orchid Hotels is 1.26 times less risky than LT Foods. The stock trades about -0.03 of its potential returns per unit of risk. The LT Foods Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 20,049 in LT Foods Limited on August 28, 2024 and sell it today you would earn a total of 15,416 from holding LT Foods Limited or generate 76.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Orchid Hotels vs. LT Foods Limited
Performance |
| Timeline |
| Royal Orchid Hotels |
| LT Foods Limited |
Royal Orchid and LT Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Orchid and LT Foods
The main advantage of trading using opposite Royal Orchid and LT Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Orchid position performs unexpectedly, LT Foods 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 LT Foods will offset losses from the drop in LT Foods' long position.| Royal Orchid vs. MMTC Limited | Royal Orchid vs. Kingfa Science Technology | Royal Orchid vs. Rico Auto Industries | Royal Orchid vs. GACM Technologies Limited |
| LT Foods vs. SINCLAIRS HOTELS ORD | LT Foods vs. Dharani SugarsChemicals Limited | LT Foods vs. Royal Orchid Hotels | LT Foods vs. Sukhjit Starch Chemicals |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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