Correlation Between Lemon Tree and India Tourism

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

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

Diversification Opportunities for Lemon Tree and India Tourism

0.33

Correlation Coefficient

Lemon Tree  India Tourism

Weak diversification

The 3 months correlation between Lemon and India is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lemon Tree Hotels and India Tourism Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Tourism Development and Lemon Tree 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 Lemon Tree Hotels are associated (or correlated) with India Tourism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Tourism Development has no effect on the direction of Lemon Tree i.e., Lemon Tree and India Tourism go up and down completely randomly.

Pair Corralation between Lemon Tree and India Tourism

Assuming the 90 days trading horizon Lemon Tree Hotels is expected to generate 1.19 times more return on investment than India Tourism. However, Lemon Tree is 1.19 times more volatile than India Tourism Development. It trades about 0.07 of its potential returns per unit of risk. India Tourism Development is currently generating about 0.01 per unit of risk. If you would invest  14,562  in Lemon Tree Hotels on April 24, 2025 and sell it today you would earn a total of  1,171  from holding Lemon Tree Hotels or generate 8.04% return on investment over 90 days.

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

Lemon Tree Hotels  vs.  India Tourism Development

Lemon Tree Hotels

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lemon Tree Hotels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Lemon Tree may actually be approaching a critical reversion point that can send shares even higher in August 2025.

India Tourism Development

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in India Tourism Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, India Tourism 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 Lemon Tree and India Tourism

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

The idea behind Lemon Tree Hotels and India Tourism Development 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .