Correlation Between Lemon Tree and Salzer Electronics
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By analyzing existing cross correlation between Lemon Tree Hotels and Salzer Electronics Limited, you can compare the effects of market volatilities on Lemon Tree and Salzer Electronics 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 Lemon Tree with a short position of Salzer Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemon Tree and Salzer Electronics.
Diversification Opportunities for Lemon Tree and Salzer Electronics
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lemon and Salzer is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lemon Tree Hotels and Salzer Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzer Electronics and Lemon Tree 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 Lemon Tree Hotels are associated (or correlated) with Salzer Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzer Electronics has no effect on the direction of Lemon Tree i.e., Lemon Tree and Salzer Electronics go up and down completely randomly.
Pair Corralation between Lemon Tree and Salzer Electronics
Assuming the 90 days trading horizon Lemon Tree is expected to generate 2.15 times less return on investment than Salzer Electronics. But when comparing it to its historical volatility, Lemon Tree Hotels is 2.12 times less risky than Salzer Electronics. It trades about 0.21 of its potential returns per unit of risk. Salzer Electronics Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 93,040 in Salzer Electronics Limited on September 25, 2024 and sell it today you would earn a total of 54,515 from holding Salzer Electronics Limited or generate 58.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lemon Tree Hotels vs. Salzer Electronics Limited
Performance |
Timeline |
Lemon Tree Hotels |
Salzer Electronics |
Lemon Tree and Salzer Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lemon Tree and Salzer Electronics
The main advantage of trading using opposite Lemon Tree and Salzer Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemon Tree position performs unexpectedly, Salzer Electronics 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 Salzer Electronics will offset losses from the drop in Salzer Electronics' long position.Lemon Tree vs. Kaushalya Infrastructure Development | Lemon Tree vs. Tarapur Transformers Limited | Lemon Tree vs. Kingfa Science Technology | Lemon Tree vs. Rico Auto Industries |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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