Correlation Between Cantabil Retail and LLOYDS METALS

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

By analyzing existing cross correlation between Cantabil Retail India and LLOYDS METALS AND, you can compare the effects of market volatilities on Cantabil Retail and LLOYDS METALS 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 Cantabil Retail with a short position of LLOYDS METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cantabil Retail and LLOYDS METALS.

Diversification Opportunities for Cantabil Retail and LLOYDS METALS

0.89

Correlation Coefficient

Cantabil Retail  LLOYDS METALS

Very poor diversification

The 3 months correlation between Cantabil and LLOYDS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India and LLOYDS METALS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LLOYDS METALS AND and Cantabil Retail 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 Cantabil Retail India are associated (or correlated) with LLOYDS METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LLOYDS METALS AND has no effect on the direction of Cantabil Retail i.e., Cantabil Retail and LLOYDS METALS go up and down completely randomly.

Pair Corralation between Cantabil Retail and LLOYDS METALS

Assuming the 90 days trading horizon Cantabil Retail is expected to generate 1.8 times less return on investment than LLOYDS METALS. In addition to that, Cantabil Retail is 1.06 times more volatile than LLOYDS METALS AND. It trades about 0.09 of its total potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.17 per unit of volatility. If you would invest  69,583  in LLOYDS METALS AND on October 9, 2024 and sell it today you would earn a total of  72,507  from holding LLOYDS METALS AND or generate 104.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.46%
Values	Daily Returns

Cantabil Retail India  vs.  LLOYDS METALS AND

Cantabil Retail India

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

LLOYDS METALS AND

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cantabil Retail and LLOYDS METALS

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

The idea behind Cantabil Retail India and LLOYDS METALS AND 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 Global Correlations module to find global opportunities by holding instruments from different markets.