Correlation Between Tembo Global and LLOYDS METALS

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

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

Diversification Opportunities for Tembo Global and LLOYDS METALS

0.6

Correlation Coefficient

Tembo Global  LLOYDS METALS

Poor diversification

The 3 months correlation between Tembo and LLOYDS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tembo Global Industries 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 Tembo Global 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 Tembo Global Industries 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 Tembo Global i.e., Tembo Global and LLOYDS METALS go up and down completely randomly.

Pair Corralation between Tembo Global and LLOYDS METALS

Assuming the 90 days trading horizon Tembo Global Industries is expected to generate 1.3 times more return on investment than LLOYDS METALS. However, Tembo Global is 1.3 times more volatile than LLOYDS METALS AND. It trades about 0.21 of its potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.23 per unit of risk. If you would invest  48,000  in Tembo Global Industries on October 25, 2024 and sell it today you would earn a total of  24,590  from holding Tembo Global Industries or generate 51.23% return on investment over 90 days.

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

Tembo Global Industries  vs.  LLOYDS METALS AND

Tembo Global Industries

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tembo Global Industries are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Tembo Global displayed 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 unsteady basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tembo Global and LLOYDS METALS

The main advantage of trading using opposite Tembo Global and LLOYDS METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tembo Global 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 Tembo Global Industries 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.