Correlation Between Shivalik Bimetal and Lemon Tree

Can any of the company-specific risk be diversified away by investing in both Shivalik Bimetal and Lemon Tree 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 Shivalik Bimetal and Lemon Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shivalik Bimetal Controls and Lemon Tree Hotels, you can compare the effects of market volatilities on Shivalik Bimetal and Lemon Tree 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 Shivalik Bimetal with a short position of Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shivalik Bimetal and Lemon Tree.

Diversification Opportunities for Shivalik Bimetal and Lemon Tree

-0.43

Correlation Coefficient

Shivalik Bimetal  Lemon Tree

Very good diversification

The 3 months correlation between Shivalik and Lemon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Shivalik Bimetal Controls and Lemon Tree Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemon Tree Hotels and Shivalik Bimetal 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 Shivalik Bimetal Controls are associated (or correlated) with Lemon Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemon Tree Hotels has no effect on the direction of Shivalik Bimetal i.e., Shivalik Bimetal and Lemon Tree go up and down completely randomly.

Pair Corralation between Shivalik Bimetal and Lemon Tree

Assuming the 90 days trading horizon Shivalik Bimetal Controls is expected to under-perform the Lemon Tree. In addition to that, Shivalik Bimetal is 1.08 times more volatile than Lemon Tree Hotels. It trades about -0.13 of its total potential returns per unit of risk. Lemon Tree Hotels is currently generating about 0.17 per unit of volatility. If you would invest  11,459  in Lemon Tree Hotels on October 25, 2024 and sell it today you would earn a total of  2,418  from holding Lemon Tree Hotels or generate 21.1% return on investment over 90 days.

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

Shivalik Bimetal Controls  vs.  Lemon Tree Hotels

Shivalik Bimetal Controls

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lemon Tree Hotels

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lemon Tree Hotels are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Lemon Tree reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shivalik Bimetal and Lemon Tree

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

The idea behind Shivalik Bimetal Controls and Lemon Tree Hotels 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.