Correlation Between Lakshmi Finance and Gujarat Narmada

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

By analyzing existing cross correlation between Lakshmi Finance Industrial and Gujarat Narmada Valley, you can compare the effects of market volatilities on Lakshmi Finance and Gujarat Narmada 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 Lakshmi Finance with a short position of Gujarat Narmada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakshmi Finance and Gujarat Narmada.

Diversification Opportunities for Lakshmi Finance and Gujarat Narmada

0.44

Correlation Coefficient

Lakshmi Finance  Gujarat Narmada

Very weak diversification

The 3 months correlation between Lakshmi and Gujarat is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lakshmi Finance Industrial and Gujarat Narmada Valley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Narmada Valley and Lakshmi Finance 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 Lakshmi Finance Industrial are associated (or correlated) with Gujarat Narmada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Narmada Valley has no effect on the direction of Lakshmi Finance i.e., Lakshmi Finance and Gujarat Narmada go up and down completely randomly.

Pair Corralation between Lakshmi Finance and Gujarat Narmada

If you would invest  12,098  in Lakshmi Finance Industrial on October 25, 2024 and sell it today you would earn a total of  8,418  from holding Lakshmi Finance Industrial or generate 69.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Lakshmi Finance Industrial  vs.  Gujarat Narmada Valley

Lakshmi Finance Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lakshmi Finance Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Gujarat Narmada Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gujarat Narmada Valley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gujarat Narmada is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lakshmi Finance and Gujarat Narmada

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

The idea behind Lakshmi Finance Industrial and Gujarat Narmada Valley 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.