Correlation Between Kavveri Telecom and Lotus Eye

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

By analyzing existing cross correlation between Kavveri Telecom Products and Lotus Eye Hospital, you can compare the effects of market volatilities on Kavveri Telecom and Lotus Eye 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 Kavveri Telecom with a short position of Lotus Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kavveri Telecom and Lotus Eye.

Diversification Opportunities for Kavveri Telecom and Lotus Eye

-0.34

Correlation Coefficient

Kavveri Telecom  Lotus Eye

Very good diversification

The 3 months correlation between Kavveri and Lotus is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kavveri Telecom Products and Lotus Eye Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Eye Hospital and Kavveri Telecom 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 Kavveri Telecom Products are associated (or correlated) with Lotus Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Eye Hospital has no effect on the direction of Kavveri Telecom i.e., Kavveri Telecom and Lotus Eye go up and down completely randomly.

Pair Corralation between Kavveri Telecom and Lotus Eye

Assuming the 90 days trading horizon Kavveri Telecom Products is expected to generate 1.13 times more return on investment than Lotus Eye. However, Kavveri Telecom is 1.13 times more volatile than Lotus Eye Hospital. It trades about 0.08 of its potential returns per unit of risk. Lotus Eye Hospital is currently generating about -0.02 per unit of risk. If you would invest  3,936  in Kavveri Telecom Products on September 5, 2024 and sell it today you would earn a total of  508.00  from holding Kavveri Telecom Products or generate 12.91% return on investment over 90 days.

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

Kavveri Telecom Products  vs.  Lotus Eye Hospital

Kavveri Telecom Products

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kavveri Telecom Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Kavveri Telecom demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lotus Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotus Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Lotus Eye is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kavveri Telecom and Lotus Eye

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

The idea behind Kavveri Telecom Products and Lotus Eye Hospital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.