Correlation Between HCL Technologies and LTIMindtree

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

By analyzing existing cross correlation between HCL Technologies Limited and LTIMindtree Limited, you can compare the effects of market volatilities on HCL Technologies and LTIMindtree 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 HCL Technologies with a short position of LTIMindtree. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCL Technologies and LTIMindtree.

Diversification Opportunities for HCL Technologies and LTIMindtree

0.78

Correlation Coefficient

HCL Technologies  LTIMindtree

Poor diversification

The 3 months correlation between HCL and LTIMindtree is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding HCL Technologies Limited and LTIMindtree Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTIMindtree Limited and HCL Technologies 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 HCL Technologies Limited are associated (or correlated) with LTIMindtree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTIMindtree Limited has no effect on the direction of HCL Technologies i.e., HCL Technologies and LTIMindtree go up and down completely randomly.

Pair Corralation between HCL Technologies and LTIMindtree

Assuming the 90 days trading horizon HCL Technologies Limited is expected to under-perform the LTIMindtree. In addition to that, HCL Technologies is 1.02 times more volatile than LTIMindtree Limited. It trades about -0.02 of its total potential returns per unit of risk. LTIMindtree Limited is currently generating about 0.17 per unit of volatility. If you would invest  449,318  in LTIMindtree Limited on April 24, 2025 and sell it today you would earn a total of  68,232  from holding LTIMindtree Limited or generate 15.19% return on investment over 90 days.

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

HCL Technologies Limited  vs.  LTIMindtree Limited

HCL Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days HCL Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, HCL Technologies is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

LTIMindtree Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LTIMindtree Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, LTIMindtree unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HCL Technologies and LTIMindtree

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

The idea behind HCL Technologies Limited and LTIMindtree Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.