Correlation Between LLOYDS METALS and Indo Borax

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

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

Diversification Opportunities for LLOYDS METALS and Indo Borax

-0.64

Correlation Coefficient

LLOYDS METALS  Indo Borax

Excellent diversification

The 3 months correlation between LLOYDS and Indo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and Indo Borax Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Borax Chemicals and LLOYDS METALS 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 LLOYDS METALS AND are associated (or correlated) with Indo Borax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Borax Chemicals has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Indo Borax go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Indo Borax

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 0.95 times more return on investment than Indo Borax. However, LLOYDS METALS AND is 1.05 times less risky than Indo Borax. It trades about 0.23 of its potential returns per unit of risk. Indo Borax Chemicals is currently generating about -0.04 per unit of risk. If you would invest  97,485  in LLOYDS METALS AND on October 23, 2024 and sell it today you would earn a total of  42,125  from holding LLOYDS METALS AND or generate 43.21% return on investment over 90 days.

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

LLOYDS METALS AND  vs.  Indo Borax Chemicals

LLOYDS METALS AND

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

Indo Borax Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Borax Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with LLOYDS METALS and Indo Borax

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

The idea behind LLOYDS METALS AND and Indo Borax Chemicals 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.