Correlation Between LLOYDS METALS and Punjab National

Can any of the company-specific risk be diversified away by investing in both LLOYDS METALS and Punjab National 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 Punjab National 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 Punjab National Bank, you can compare the effects of market volatilities on LLOYDS METALS and Punjab National 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 Punjab National. Check out your portfolio center. Please also check ongoing floating volatility patterns of LLOYDS METALS and Punjab National.

Diversification Opportunities for LLOYDS METALS and Punjab National

-0.27

Correlation Coefficient

LLOYDS METALS  Punjab National

Very good diversification

The 3 months correlation between LLOYDS and Punjab is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and Punjab National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Punjab National Bank 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 Punjab National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Punjab National Bank has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Punjab National go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Punjab National

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 1.17 times more return on investment than Punjab National. However, LLOYDS METALS is 1.17 times more volatile than Punjab National Bank. It trades about 0.27 of its potential returns per unit of risk. Punjab National Bank is currently generating about 0.02 per unit of risk. If you would invest  75,430  in LLOYDS METALS AND on September 12, 2024 and sell it today you would earn a total of  37,100  from holding LLOYDS METALS AND or generate 49.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

LLOYDS METALS AND  vs.  Punjab National Bank

LLOYDS METALS AND

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 20 (%) 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.

Punjab National Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Punjab National Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Punjab National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LLOYDS METALS and Punjab National

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

The idea behind LLOYDS METALS AND and Punjab National Bank 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.