Correlation Between Steel Authority and LT Foods
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By analyzing existing cross correlation between Steel Authority of and LT Foods Limited, you can compare the effects of market volatilities on Steel Authority 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 Steel Authority with a short position of LT Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Authority and LT Foods.
Diversification Opportunities for Steel Authority and LT Foods
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and LTFOODS is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of 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 Steel Authority 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 Steel Authority of 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 Steel Authority i.e., Steel Authority and LT Foods go up and down completely randomly.
Pair Corralation between Steel Authority and LT Foods
Assuming the 90 days trading horizon Steel Authority of is expected to under-perform the LT Foods. But the stock apears to be less risky and, when comparing its historical volatility, Steel Authority of is 1.2 times less risky than LT Foods. The stock trades about -0.09 of its potential returns per unit of risk. The LT Foods Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 28,455 in LT Foods Limited on October 26, 2024 and sell it today you would earn a total of 11,600 from holding LT Foods Limited or generate 40.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Authority of vs. LT Foods Limited
Performance |
| Timeline |
| Steel Authority |
| LT Foods Limited |
Steel Authority and LT Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Authority and LT Foods
The main advantage of trading using opposite Steel Authority and LT Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority 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.| Steel Authority vs. NMDC Limited | Steel Authority vs. Embassy Office Parks | Steel Authority vs. Jai Balaji Industries | Steel Authority vs. Gujarat Narmada Valley |
| LT Foods vs. Pritish Nandy Communications | LT Foods vs. Coffee Day Enterprises | LT Foods vs. Indian Metals Ferro | LT Foods vs. Paramount Communications 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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