Correlation Between Allied Blenders and Lakshmi Finance

Can any of the company-specific risk be diversified away by investing in both Allied Blenders 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 Allied Blenders and Lakshmi Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allied Blenders Distillers and Lakshmi Finance Industrial, you can compare the effects of market volatilities on Allied Blenders 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 Allied Blenders with a short position of Lakshmi Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Blenders and Lakshmi Finance.

Diversification Opportunities for Allied Blenders and Lakshmi Finance

-0.37

Correlation Coefficient

Allied Blenders  Lakshmi Finance

Very good diversification

The 3 months correlation between Allied and Lakshmi is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Allied Blenders Distillers 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 Allied Blenders 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 Allied Blenders Distillers 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 Allied Blenders i.e., Allied Blenders and Lakshmi Finance go up and down completely randomly.

Pair Corralation between Allied Blenders and Lakshmi Finance

Assuming the 90 days trading horizon Allied Blenders Distillers is expected to generate 0.85 times more return on investment than Lakshmi Finance. However, Allied Blenders Distillers is 1.17 times less risky than Lakshmi Finance. It trades about 0.02 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about -0.19 per unit of risk. If you would invest  40,680  in Allied Blenders Distillers on October 23, 2024 and sell it today you would earn a total of  170.00  from holding Allied Blenders Distillers or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Allied Blenders Distillers  vs.  Lakshmi Finance Industrial

Allied Blenders Dist

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Blenders Distillers are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allied Blenders unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Allied Blenders and Lakshmi Finance

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

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.