Correlation Between Samhi Hotels and Lakshmi Finance
Can any of the company-specific risk be diversified away by investing in both Samhi Hotels 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 Samhi Hotels and Lakshmi Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhi Hotels Limited and Lakshmi Finance Industrial, you can compare the effects of market volatilities on Samhi Hotels 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 Samhi Hotels with a short position of Lakshmi Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhi Hotels and Lakshmi Finance.
Diversification Opportunities for Samhi Hotels and Lakshmi Finance
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Samhi and Lakshmi is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels 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 Samhi Hotels 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 Samhi Hotels 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 Samhi Hotels i.e., Samhi Hotels and Lakshmi Finance go up and down completely randomly.
Pair Corralation between Samhi Hotels and Lakshmi Finance
Assuming the 90 days trading horizon Samhi Hotels Limited is expected to under-perform the Lakshmi Finance. But the stock apears to be less risky and, when comparing its historical volatility, Samhi Hotels Limited is 1.74 times less risky than Lakshmi Finance. The stock trades about -0.05 of its potential returns per unit of risk. The Lakshmi Finance Industrial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 24,891 in Lakshmi Finance Industrial on October 18, 2024 and sell it today you would lose (3,231) from holding Lakshmi Finance Industrial or give up 12.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samhi Hotels Limited vs. Lakshmi Finance Industrial
Performance |
| Timeline |
| Samhi Hotels Limited |
| Lakshmi Finance Indu |
Samhi Hotels and Lakshmi Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samhi Hotels and Lakshmi Finance
The main advantage of trading using opposite Samhi Hotels and Lakshmi Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhi Hotels 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.| Samhi Hotels vs. Country Club Hospitality | Samhi Hotels vs. Associated Alcohols Breweries | Samhi Hotels vs. Nalwa Sons Investments | Samhi Hotels vs. Kalyani Investment |
| Lakshmi Finance vs. Tube Investments of | Lakshmi Finance vs. Usha Martin Education | Lakshmi Finance vs. Cholamandalam Investment and | Lakshmi Finance vs. Samhi Hotels 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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