Correlation Between Speciality Restaurants and LLOYDS METALS

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

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

Diversification Opportunities for Speciality Restaurants and LLOYDS METALS

0.43

Correlation Coefficient

Speciality Restaurants  LLOYDS METALS

Very weak diversification

The 3 months correlation between Speciality and LLOYDS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Speciality Restaurants Limited 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 Speciality Restaurants 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 Speciality Restaurants Limited 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 Speciality Restaurants i.e., Speciality Restaurants and LLOYDS METALS go up and down completely randomly.

Pair Corralation between Speciality Restaurants and LLOYDS METALS

Assuming the 90 days trading horizon Speciality Restaurants Limited is expected to under-perform the LLOYDS METALS. But the stock apears to be less risky and, when comparing its historical volatility, Speciality Restaurants Limited is 1.08 times less risky than LLOYDS METALS. The stock trades about -0.01 of its potential returns per unit of risk. The LLOYDS METALS AND is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  121,515  in LLOYDS METALS AND on December 28, 2024 and sell it today you would earn a total of  7,300  from holding LLOYDS METALS AND or generate 6.01% return on investment over 90 days.

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

Speciality Restaurants Limited  vs.  LLOYDS METALS AND

Speciality Restaurants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Speciality Restaurants Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Speciality Restaurants is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

LLOYDS METALS AND

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, LLOYDS METALS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Speciality Restaurants and LLOYDS METALS

The main advantage of trading using opposite Speciality Restaurants and LLOYDS METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Speciality Restaurants 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 Speciality Restaurants Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.