Correlation Between Kaynes Technology and LT Technology

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

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

Diversification Opportunities for Kaynes Technology and LT Technology

-0.34

Correlation Coefficient

Kaynes Technology  LT Technology

Very good diversification

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

Pair Corralation between Kaynes Technology and LT Technology

Assuming the 90 days trading horizon Kaynes Technology India is expected to under-perform the LT Technology. In addition to that, Kaynes Technology is 1.7 times more volatile than LT Technology Services. It trades about -0.13 of its total potential returns per unit of risk. LT Technology Services is currently generating about -0.07 per unit of volatility. If you would invest  528,520  in LT Technology Services on November 29, 2024 and sell it today you would lose (55,735) from holding LT Technology Services or give up 10.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Kaynes Technology India  vs.  LT Technology Services

Kaynes Technology India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaynes Technology India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

LT Technology Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days LT Technology Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Kaynes Technology and LT Technology

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

The idea behind Kaynes Technology India and LT Technology Services 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.