Correlation Between KIOCL and Lemon Tree

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

By analyzing existing cross correlation between KIOCL Limited and Lemon Tree Hotels, you can compare the effects of market volatilities on KIOCL and Lemon Tree 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 KIOCL with a short position of Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIOCL and Lemon Tree.

Diversification Opportunities for KIOCL and Lemon Tree

0.57

Correlation Coefficient

KIOCL  Lemon Tree

Very weak diversification

The 3 months correlation between KIOCL and Lemon is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KIOCL Limited and Lemon Tree Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemon Tree Hotels and KIOCL 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 KIOCL Limited are associated (or correlated) with Lemon Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemon Tree Hotels has no effect on the direction of KIOCL i.e., KIOCL and Lemon Tree go up and down completely randomly.

Pair Corralation between KIOCL and Lemon Tree

Assuming the 90 days trading horizon KIOCL Limited is expected to under-perform the Lemon Tree. In addition to that, KIOCL is 1.35 times more volatile than Lemon Tree Hotels. It trades about -0.14 of its total potential returns per unit of risk. Lemon Tree Hotels is currently generating about -0.04 per unit of volatility. If you would invest  14,972  in Lemon Tree Hotels on December 26, 2024 and sell it today you would lose (1,326) from holding Lemon Tree Hotels or give up 8.86% of portfolio value over 90 days.

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

KIOCL Limited  vs.  Lemon Tree Hotels

KIOCL Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days KIOCL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lemon Tree Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lemon Tree Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with KIOCL and Lemon Tree

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

The idea behind KIOCL Limited and Lemon Tree Hotels 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.