Correlation Between Lemon Tree and One 97

Can any of the company-specific risk be diversified away by investing in both Lemon Tree and One 97 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 One 97 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 One 97 Communications, you can compare the effects of market volatilities on Lemon Tree and One 97 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 One 97. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemon Tree and One 97.

Diversification Opportunities for Lemon Tree and One 97

0.81

Correlation Coefficient

Lemon Tree  One 97

Very poor diversification

The 3 months correlation between Lemon and One is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lemon Tree Hotels and One 97 Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One 97 Communications 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 One 97. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One 97 Communications has no effect on the direction of Lemon Tree i.e., Lemon Tree and One 97 go up and down completely randomly.

Pair Corralation between Lemon Tree and One 97

Assuming the 90 days trading horizon Lemon Tree is expected to generate 3.92 times less return on investment than One 97. But when comparing it to its historical volatility, Lemon Tree Hotels is 1.17 times less risky than One 97. It trades about 0.05 of its potential returns per unit of risk. One 97 Communications is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  86,600  in One 97 Communications on May 5, 2025 and sell it today you would earn a total of  21,040  from holding One 97 Communications or generate 24.3% return on investment over 90 days.

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

Lemon Tree Hotels  vs.  One 97 Communications

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 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Lemon Tree is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

One 97 Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One 97 Communications are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, One 97 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lemon Tree and One 97

The main advantage of trading using opposite Lemon Tree and One 97 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemon Tree position performs unexpectedly, One 97 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 One 97 will offset losses from the drop in One 97's long position.

The idea behind Lemon Tree Hotels and One 97 Communications 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..