Correlation Between UTI Asset and LT Technology

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

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

Diversification Opportunities for UTI Asset and LT Technology

0.17

Correlation Coefficient

UTI Asset  LT Technology

Average diversification

The 3 months correlation between UTI and LTTS is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding UTI Asset Management 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 UTI Asset 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 UTI Asset Management 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 UTI Asset i.e., UTI Asset and LT Technology go up and down completely randomly.

Pair Corralation between UTI Asset and LT Technology

Assuming the 90 days trading horizon UTI Asset Management is expected to under-perform the LT Technology. In addition to that, UTI Asset is 1.33 times more volatile than LT Technology Services. It trades about -0.06 of its total potential returns per unit of risk. LT Technology Services is currently generating about 0.0 per unit of volatility. 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	Insignificant
Accuracy	98.39%
Values	Daily Returns

UTI Asset Management  vs.  LT Technology Services

UTI Asset Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days UTI Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with UTI Asset and LT Technology

The main advantage of trading using opposite UTI Asset and LT Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UTI Asset 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 UTI Asset Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.