Correlation Between Sportking India and Lakshmi Finance

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

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

Diversification Opportunities for Sportking India and Lakshmi Finance

0.45

Correlation Coefficient

Sportking India  Lakshmi Finance

Very weak diversification

The 3 months correlation between Sportking and Lakshmi is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sportking India Limited and Lakshmi Finance Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakshmi Finance Indu and Sportking India 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 Sportking India Limited are associated (or correlated) with Lakshmi Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakshmi Finance Indu has no effect on the direction of Sportking India i.e., Sportking India and Lakshmi Finance go up and down completely randomly.

Pair Corralation between Sportking India and Lakshmi Finance

Assuming the 90 days trading horizon Sportking India Limited is expected to generate 1.31 times more return on investment than Lakshmi Finance. However, Sportking India is 1.31 times more volatile than Lakshmi Finance Industrial. It trades about 0.17 of its potential returns per unit of risk. Lakshmi Finance Industrial is currently generating about 0.04 per unit of risk. If you would invest  9,020  in Sportking India Limited on April 25, 2025 and sell it today you would earn a total of  3,889  from holding Sportking India Limited or generate 43.12% return on investment over 90 days.

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

Sportking India Limited  vs.  Lakshmi Finance Industrial

Sportking India

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sportking India Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Sportking India demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lakshmi Finance Indu

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lakshmi Finance Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lakshmi Finance may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Sportking India and Lakshmi Finance

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

The idea behind Sportking India Limited and Lakshmi Finance Industrial 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.