Correlation Between Taj GVK and LT Technology

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

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

Diversification Opportunities for Taj GVK and LT Technology

-0.41

Correlation Coefficient

Taj GVK  LT Technology

Very good diversification

The 3 months correlation between Taj and LTTS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and LT Technology Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Technology Services and Taj GVK 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 Taj GVK Hotels are associated (or correlated) with LT Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Technology Services has no effect on the direction of Taj GVK i.e., Taj GVK and LT Technology go up and down completely randomly.

Pair Corralation between Taj GVK and LT Technology

Assuming the 90 days trading horizon Taj GVK Hotels is expected to generate 1.83 times more return on investment than LT Technology. However, Taj GVK is 1.83 times more volatile than LT Technology Services. It trades about 0.16 of its potential returns per unit of risk. LT Technology Services is currently generating about 0.04 per unit of risk. If you would invest  28,690  in Taj GVK Hotels on October 22, 2024 and sell it today you would earn a total of  11,290  from holding Taj GVK Hotels or generate 39.35% return on investment over 90 days.

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

Taj GVK Hotels  vs.  LT Technology Services

Taj GVK Hotels

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

LT Technology Services

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LT Technology Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LT Technology is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Taj GVK and LT Technology

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

The idea behind Taj GVK Hotels and LT Technology Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.