Correlation Between Lemon Tree and Shivalik Bimetal

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

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

Diversification Opportunities for Lemon Tree and Shivalik Bimetal

-0.43

Correlation Coefficient

Lemon Tree  Shivalik Bimetal

Very good diversification

The 3 months correlation between Lemon and Shivalik is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lemon Tree Hotels and Shivalik Bimetal Controls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shivalik Bimetal Controls and Lemon Tree 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 Lemon Tree Hotels are associated (or correlated) with Shivalik Bimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shivalik Bimetal Controls has no effect on the direction of Lemon Tree i.e., Lemon Tree and Shivalik Bimetal go up and down completely randomly.

Pair Corralation between Lemon Tree and Shivalik Bimetal

Assuming the 90 days trading horizon Lemon Tree Hotels is expected to generate 0.94 times more return on investment than Shivalik Bimetal. However, Lemon Tree Hotels is 1.07 times less risky than Shivalik Bimetal. It trades about 0.16 of its potential returns per unit of risk. Shivalik Bimetal Controls is currently generating about -0.15 per unit of risk. If you would invest  11,469  in Lemon Tree Hotels on October 26, 2024 and sell it today you would earn a total of  2,298  from holding Lemon Tree Hotels or generate 20.04% return on investment over 90 days.

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

Lemon Tree Hotels  vs.  Shivalik Bimetal Controls

Lemon Tree Hotels

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lemon Tree Hotels are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Lemon Tree reported solid returns over the last few months and may actually be approaching a breakup point.

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shivalik Bimetal Controls has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lemon Tree and Shivalik Bimetal

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

The idea behind Lemon Tree Hotels and Shivalik Bimetal Controls 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.