Correlation Between LLOYDS METALS and Sapphire Foods

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

Diversification Opportunities for LLOYDS METALS and Sapphire Foods

0.23

Correlation Coefficient

LLOYDS METALS  Sapphire Foods

Modest diversification

The 3 months correlation between LLOYDS and Sapphire is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and Sapphire Foods India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapphire Foods India 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 Sapphire Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapphire Foods India has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Sapphire Foods go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Sapphire Foods

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 1.19 times more return on investment than Sapphire Foods. However, LLOYDS METALS is 1.19 times more volatile than Sapphire Foods India. It trades about 0.11 of its potential returns per unit of risk. Sapphire Foods India is currently generating about 0.0 per unit of risk. If you would invest  94,870  in LLOYDS METALS AND on November 20, 2024 and sell it today you would earn a total of  18,105  from holding LLOYDS METALS AND or generate 19.08% return on investment over 90 days.

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

LLOYDS METALS AND  vs.  Sapphire Foods India

LLOYDS METALS AND

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 8 (%) 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.

Sapphire Foods India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sapphire Foods India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Sapphire Foods is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LLOYDS METALS and Sapphire Foods

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

The idea behind LLOYDS METALS AND and Sapphire Foods India 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.