Correlation Between LT Technology and Agarwal Industrial

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

By analyzing existing cross correlation between LT Technology Services and Agarwal Industrial, you can compare the effects of market volatilities on LT Technology and Agarwal Industrial 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 Technology with a short position of Agarwal Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LT Technology and Agarwal Industrial.

Diversification Opportunities for LT Technology and Agarwal Industrial

0.2

Correlation Coefficient

LT Technology  Agarwal Industrial

Modest diversification

The 3 months correlation between LTTS and Agarwal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding LT Technology Services and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and LT Technology 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 Technology Services are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of LT Technology i.e., LT Technology and Agarwal Industrial go up and down completely randomly.

Pair Corralation between LT Technology and Agarwal Industrial

Assuming the 90 days trading horizon LT Technology Services is expected to generate 0.74 times more return on investment than Agarwal Industrial. However, LT Technology Services is 1.34 times less risky than Agarwal Industrial. It trades about 0.0 of its potential returns per unit of risk. Agarwal Industrial is currently generating about -0.09 per unit of risk. If you would invest  472,955  in LT Technology Services on December 24, 2024 and sell it today you would lose (5,915) from holding LT Technology Services or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

LT Technology Services  vs.  Agarwal Industrial

LT Technology Services

Risk-Adjusted Performance

Very Weak

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

Agarwal Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agarwal Industrial 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 forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LT Technology and Agarwal Industrial

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

The idea behind LT Technology Services and Agarwal Industrial 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.