Correlation Between Advani Hotels and Lakshmi Finance

Can any of the company-specific risk be diversified away by investing in both Advani 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 Advani 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 Advani Hotels Resorts and Lakshmi Finance Industrial, you can compare the effects of market volatilities on Advani 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 Advani Hotels with a short position of Lakshmi Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advani Hotels and Lakshmi Finance.

Diversification Opportunities for Advani Hotels and Lakshmi Finance

0.39

Correlation Coefficient

Advani Hotels  Lakshmi Finance

Weak diversification

The 3 months correlation between Advani and Lakshmi is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Advani Hotels Resorts 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 Advani 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 Advani Hotels Resorts 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 Advani Hotels i.e., Advani Hotels and Lakshmi Finance go up and down completely randomly.

Pair Corralation between Advani Hotels and Lakshmi Finance

Assuming the 90 days trading horizon Advani Hotels is expected to generate 1.62 times less return on investment than Lakshmi Finance. But when comparing it to its historical volatility, Advani Hotels Resorts is 1.42 times less risky than Lakshmi Finance. It trades about 0.05 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12,655  in Lakshmi Finance Industrial on September 30, 2024 and sell it today you would earn a total of  10,850  from holding Lakshmi Finance Industrial or generate 85.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Advani Hotels Resorts  vs.  Lakshmi Finance Industrial

Advani Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advani Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Advani Hotels is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Lakshmi Finance Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lakshmi Finance Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Advani Hotels and Lakshmi Finance

The main advantage of trading using opposite Advani Hotels and Lakshmi Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advani 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.

The idea behind Advani Hotels Resorts and Lakshmi Finance Industrial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.