Correlation Between Xpro India and LT Technology

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Can any of the company-specific risk be diversified away by investing in both Xpro India and LT Technology 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 Xpro India and LT Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xpro India Limited and LT Technology Services, you can compare the effects of market volatilities on Xpro India and LT Technology 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 Xpro India with a short position of LT Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xpro India and LT Technology.

Diversification Opportunities for Xpro India and LT Technology

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Xpro and LTTS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xpro India Limited and LT Technology Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Technology Services and Xpro India 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 Xpro India Limited are associated (or correlated) with LT Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Technology Services has no effect on the direction of Xpro India i.e., Xpro India and LT Technology go up and down completely randomly.

Pair Corralation between Xpro India and LT Technology

Assuming the 90 days trading horizon Xpro India Limited is expected to generate 2.21 times more return on investment than LT Technology. However, Xpro India is 2.21 times more volatile than LT Technology Services. It trades about 0.34 of its potential returns per unit of risk. LT Technology Services is currently generating about 0.17 per unit of risk. If you would invest  112,930  in Xpro India Limited on September 4, 2024 and sell it today you would earn a total of  36,475  from holding Xpro India Limited or generate 32.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Xpro India Limited  vs.  LT Technology Services

 Performance 
       Timeline  
Xpro India Limited 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Xpro India Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Xpro India exhibited solid returns over the last few months and may actually be approaching a breakup point.
LT Technology Services 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LT Technology Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Xpro India and LT Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xpro India and LT Technology

The main advantage of trading using opposite Xpro India and LT Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xpro India position performs unexpectedly, LT Technology 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 Technology will offset losses from the drop in LT Technology's long position.
The idea behind Xpro India Limited and LT Technology Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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