Correlation Between LT Technology and Avonmore Capital

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

Diversification Opportunities for LT Technology and Avonmore Capital

0.31

Correlation Coefficient

LT Technology  Avonmore Capital

Weak diversification

The 3 months correlation between LTTS and Avonmore is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding LT Technology Services and Avonmore Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avonmore Capital Man 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 Avonmore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avonmore Capital Man has no effect on the direction of LT Technology i.e., LT Technology and Avonmore Capital go up and down completely randomly.

Pair Corralation between LT Technology and Avonmore Capital

Assuming the 90 days trading horizon LT Technology Services is expected to generate 0.51 times more return on investment than Avonmore Capital. However, LT Technology Services is 1.97 times less risky than Avonmore Capital. It trades about -0.05 of its potential returns per unit of risk. Avonmore Capital Management is currently generating about -0.03 per unit of risk. If you would invest  575,891  in LT Technology Services on September 13, 2024 and sell it today you would lose (33,611) from holding LT Technology Services or give up 5.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

LT Technology Services  vs.  Avonmore Capital Management

LT Technology Services

Risk-Adjusted Performance

0 of 100

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Avonmore Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avonmore Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with LT Technology and Avonmore Capital

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

The idea behind LT Technology Services and Avonmore Capital Management 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.