Correlation Between LT Foods and Silver Touch

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Can any of the company-specific risk be diversified away by investing in both LT Foods and Silver Touch 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 Silver Touch 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 Silver Touch Technologies, you can compare the effects of market volatilities on LT Foods and Silver Touch 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 Silver Touch. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Foods and Silver Touch.

Diversification Opportunities for LT Foods and Silver Touch

LTFOODSSilverDiversified AwayLTFOODSSilverDiversified Away100%
-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between LTFOODS and Silver is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding LT Foods Limited and Silver Touch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Touch Technologies 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 Silver Touch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Touch Technologies has no effect on the direction of LT Foods i.e., LT Foods and Silver Touch go up and down completely randomly.

Pair Corralation between LT Foods and Silver Touch

Assuming the 90 days trading horizon LT Foods Limited is expected to generate 2.25 times more return on investment than Silver Touch. However, LT Foods is 2.25 times more volatile than Silver Touch Technologies. It trades about 0.02 of its potential returns per unit of risk. Silver Touch Technologies is currently generating about -0.07 per unit of risk. If you would invest  39,805  in LT Foods Limited on September 29, 2024 and sell it today you would earn a total of  470.00  from holding LT Foods Limited or generate 1.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

LT Foods Limited  vs.  Silver Touch Technologies

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-50510
JavaScript chart by amCharts 3.21.15LTFOODS SILVERTUC
       Timeline  
LT Foods Limited 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in LT Foods Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LT Foods is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecDec340360380400420440460
Silver Touch Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Silver Touch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Silver Touch is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecDec660680700720740760

LT Foods and Silver Touch Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.61-6.45-4.29-2.130.02.114.36.488.6710.85 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15LTFOODS SILVERTUC
       Returns  

Pair Trading with LT Foods and Silver Touch

The main advantage of trading using opposite LT Foods and Silver Touch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LT Foods position performs unexpectedly, Silver Touch 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 Silver Touch will offset losses from the drop in Silver Touch's long position.
The idea behind LT Foods Limited and Silver Touch Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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