Correlation Between Varun Beverages and Lemon Tree
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By analyzing existing cross correlation between Varun Beverages Limited and Lemon Tree Hotels, you can compare the effects of market volatilities on Varun Beverages and Lemon Tree 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 Varun Beverages with a short position of Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varun Beverages and Lemon Tree.
Diversification Opportunities for Varun Beverages and Lemon Tree
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Varun and Lemon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Varun Beverages Limited and Lemon Tree Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemon Tree Hotels and Varun Beverages 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 Varun Beverages Limited are associated (or correlated) with Lemon Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemon Tree Hotels has no effect on the direction of Varun Beverages i.e., Varun Beverages and Lemon Tree go up and down completely randomly.
Pair Corralation between Varun Beverages and Lemon Tree
Assuming the 90 days trading horizon Varun Beverages Limited is expected to under-perform the Lemon Tree. But the stock apears to be less risky and, when comparing its historical volatility, Varun Beverages Limited is 1.38 times less risky than Lemon Tree. The stock trades about -0.35 of its potential returns per unit of risk. The Lemon Tree Hotels is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 15,334 in Lemon Tree Hotels on October 23, 2024 and sell it today you would lose (565.00) from holding Lemon Tree Hotels or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varun Beverages Limited vs. Lemon Tree Hotels
Performance |
| Timeline |
| Varun Beverages |
| Lemon Tree Hotels |
Varun Beverages and Lemon Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varun Beverages and Lemon Tree
The main advantage of trading using opposite Varun Beverages and Lemon Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varun Beverages position performs unexpectedly, Lemon Tree 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 Lemon Tree will offset losses from the drop in Lemon Tree's long position.| Varun Beverages vs. Consolidated Construction Consortium | Varun Beverages vs. Biofil Chemicals Pharmaceuticals | Varun Beverages vs. Refex Industries Limited | Varun Beverages vs. Kingfa Science Technology |
| Lemon Tree vs. Reliance Industries Limited | Lemon Tree vs. Life Insurance | Lemon Tree vs. Indian Oil | Lemon Tree vs. Oil Natural Gas |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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