Correlation Between Converge Information and LT

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

By analyzing existing cross correlation between Converge Information Communications and LT Group, you can compare the effects of market volatilities on Converge Information and LT 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 Converge Information with a short position of LT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and LT.

Diversification Opportunities for Converge Information and LT

0.2

Correlation Coefficient

Converge Information  LT

Modest diversification

The 3 months correlation between Converge and LT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and LT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Group and Converge Information 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 Converge Information Communications are associated (or correlated) with LT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Group has no effect on the direction of Converge Information i.e., Converge Information and LT go up and down completely randomly.

Pair Corralation between Converge Information and LT

Assuming the 90 days trading horizon Converge Information Communications is expected to generate 2.02 times more return on investment than LT. However, Converge Information is 2.02 times more volatile than LT Group. It trades about 0.32 of its potential returns per unit of risk. LT Group is currently generating about 0.42 per unit of risk. If you would invest  1,628  in Converge Information Communications on October 25, 2024 and sell it today you would earn a total of  172.00  from holding Converge Information Communications or generate 10.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Converge Information Communica  vs.  LT Group

Converge Information

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Converge Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LT Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LT Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, LT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Converge Information and LT

The main advantage of trading using opposite Converge Information and LT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information position performs unexpectedly, LT 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 will offset losses from the drop in LT's long position.

The idea behind Converge Information Communications and LT Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..