Correlation Between LT Foods and Sri Havisha

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

By analyzing existing cross correlation between LT Foods Limited and Sri Havisha Hospitality, you can compare the effects of market volatilities on LT Foods and Sri Havisha 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 LT Foods with a short position of Sri Havisha. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Foods and Sri Havisha.

Diversification Opportunities for LT Foods and Sri Havisha

0.22

Correlation Coefficient

LT Foods  Sri Havisha

Modest diversification

The 3 months correlation between LTFOODS and Sri is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LT Foods Limited and Sri Havisha Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Havisha Hospitality and LT Foods 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 LT Foods Limited are associated (or correlated) with Sri Havisha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Havisha Hospitality has no effect on the direction of LT Foods i.e., LT Foods and Sri Havisha go up and down completely randomly.

Pair Corralation between LT Foods and Sri Havisha

Assuming the 90 days trading horizon LT Foods Limited is expected to under-perform the Sri Havisha. But the stock apears to be less risky and, when comparing its historical volatility, LT Foods Limited is 1.28 times less risky than Sri Havisha. The stock trades about -0.05 of its potential returns per unit of risk. The Sri Havisha Hospitality is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  249.00  in Sri Havisha Hospitality on October 25, 2024 and sell it today you would lose (7.00) from holding Sri Havisha Hospitality or give up 2.81% of portfolio value over 90 days.

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

LT Foods Limited  vs.  Sri Havisha Hospitality

LT Foods Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LT Foods Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, LT Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sri Havisha Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sri Havisha Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sri Havisha is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LT Foods and Sri Havisha

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

The idea behind LT Foods Limited and Sri Havisha Hospitality 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.