Correlation Between VA Tech and LLOYDS METALS

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

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

Diversification Opportunities for VA Tech and LLOYDS METALS

0.52

Correlation Coefficient

VA Tech  LLOYDS METALS

Very weak diversification

The 3 months correlation between WABAG and LLOYDS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding VA Tech Wabag 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 VA Tech 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 VA Tech Wabag 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 VA Tech i.e., VA Tech and LLOYDS METALS go up and down completely randomly.

Pair Corralation between VA Tech and LLOYDS METALS

Assuming the 90 days trading horizon VA Tech Wabag is expected to under-perform the LLOYDS METALS. In addition to that, VA Tech is 1.44 times more volatile than LLOYDS METALS AND. It trades about -0.06 of its total potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.46 per unit of volatility. If you would invest  95,815  in LLOYDS METALS AND on September 27, 2024 and sell it today you would earn a total of  23,100  from holding LLOYDS METALS AND or generate 24.11% return on investment over 90 days.

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

VA Tech Wabag  vs.  LLOYDS METALS AND

VA Tech Wabag

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VA Tech Wabag are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, VA Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LLOYDS METALS AND

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 13 (%) 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 VA Tech and LLOYDS METALS

The main advantage of trading using opposite VA Tech and LLOYDS METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VA Tech 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 VA Tech Wabag 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.