Correlation Between Le Travenues and India Glycols

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

By analyzing existing cross correlation between Le Travenues Technology and India Glycols Limited, you can compare the effects of market volatilities on Le Travenues and India Glycols 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 Le Travenues with a short position of India Glycols. Check out your portfolio center. Please also check ongoing floating volatility patterns of Le Travenues and India Glycols.

Diversification Opportunities for Le Travenues and India Glycols

0.5

Correlation Coefficient

Le Travenues  India Glycols

Very weak diversification

The 3 months correlation between IXIGO and India is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Le Travenues Technology and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols Limited and Le Travenues 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 Le Travenues Technology are associated (or correlated) with India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of Le Travenues i.e., Le Travenues and India Glycols go up and down completely randomly.

Pair Corralation between Le Travenues and India Glycols

Assuming the 90 days trading horizon Le Travenues Technology is expected to under-perform the India Glycols. But the stock apears to be less risky and, when comparing its historical volatility, Le Travenues Technology is 1.35 times less risky than India Glycols. The stock trades about -0.05 of its potential returns per unit of risk. The India Glycols Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  135,395  in India Glycols Limited on September 3, 2024 and sell it today you would lose (7,800) from holding India Glycols Limited or give up 5.76% of portfolio value over 90 days.

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

Le Travenues Technology  vs.  India Glycols Limited

Le Travenues Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Le Travenues Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

India Glycols Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days India Glycols Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, India Glycols is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Le Travenues and India Glycols

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

The idea behind Le Travenues Technology and India Glycols Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.