Correlation Between ZF Commercial and LLOYDS METALS

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

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

Diversification Opportunities for ZF Commercial and LLOYDS METALS

0.15

Correlation Coefficient

ZF Commercial  LLOYDS METALS

Average diversification

The 3 months correlation between ZFCVINDIA and LLOYDS is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ZF Commercial Vehicle 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 ZF Commercial 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 ZF Commercial Vehicle 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 ZF Commercial i.e., ZF Commercial and LLOYDS METALS go up and down completely randomly.

Pair Corralation between ZF Commercial and LLOYDS METALS

Assuming the 90 days trading horizon ZF Commercial Vehicle is expected to generate 0.76 times more return on investment than LLOYDS METALS. However, ZF Commercial Vehicle is 1.31 times less risky than LLOYDS METALS. It trades about 0.06 of its potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.04 per unit of risk. If you would invest  1,191,815  in ZF Commercial Vehicle on December 29, 2024 and sell it today you would earn a total of  107,540  from holding ZF Commercial Vehicle or generate 9.02% return on investment over 90 days.

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

ZF Commercial Vehicle  vs.  LLOYDS METALS AND

ZF Commercial Vehicle

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ZF Commercial Vehicle are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ZF Commercial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 uncertain basic indicators, LLOYDS METALS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ZF Commercial and LLOYDS METALS

The main advantage of trading using opposite ZF Commercial and LLOYDS METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZF Commercial 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 ZF Commercial Vehicle 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .