Correlation Between Zota Health and LLOYDS METALS

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

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

Diversification Opportunities for Zota Health and LLOYDS METALS

0.96

Correlation Coefficient

Zota Health  LLOYDS METALS

Almost no diversification

The 3 months correlation between Zota and LLOYDS is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Zota Health Care 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 Zota Health 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 Zota Health Care 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 Zota Health i.e., Zota Health and LLOYDS METALS go up and down completely randomly.

Pair Corralation between Zota Health and LLOYDS METALS

Assuming the 90 days trading horizon Zota Health Care is expected to generate 1.37 times more return on investment than LLOYDS METALS. However, Zota Health is 1.37 times more volatile than LLOYDS METALS AND. It trades about 0.19 of its potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.24 per unit of risk. If you would invest  82,770  in Zota Health Care on October 25, 2024 and sell it today you would earn a total of  13,885  from holding Zota Health Care or generate 16.78% return on investment over 90 days.

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

Zota Health Care  vs.  LLOYDS METALS AND

Zota Health Care

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zota Health Care are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Zota Health unveiled 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 Zota Health and LLOYDS METALS

The main advantage of trading using opposite Zota Health and LLOYDS METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zota Health 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 Zota Health Care 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.