Correlation Between LT Technology and Indian Metals

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

Diversification Opportunities for LT Technology and Indian Metals

0.23

Correlation Coefficient

LT Technology  Indian Metals

Modest diversification

The 3 months correlation between LTTS and Indian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LT Technology Services and Indian Metals Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Metals Ferro 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 Indian Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Metals Ferro has no effect on the direction of LT Technology i.e., LT Technology and Indian Metals go up and down completely randomly.

Pair Corralation between LT Technology and Indian Metals

Assuming the 90 days trading horizon LT Technology Services is expected to generate 0.77 times more return on investment than Indian Metals. However, LT Technology Services is 1.3 times less risky than Indian Metals. It trades about 0.0 of its potential returns per unit of risk. Indian Metals Ferro is currently generating about -0.14 per unit of risk. If you would invest  474,505  in LT Technology Services on December 21, 2024 and sell it today you would lose (7,465) from holding LT Technology Services or give up 1.57% of portfolio value over 90 days.

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

LT Technology Services  vs.  Indian Metals Ferro

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

Indian Metals Ferro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indian Metals Ferro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with LT Technology and Indian Metals

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

The idea behind LT Technology Services and Indian Metals Ferro 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 Commodity Directory module to find actively traded commodities issued by global exchanges.