Correlation Between California Software and LLOYDS METALS

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

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

Diversification Opportunities for California Software and LLOYDS METALS

-0.64

Correlation Coefficient

California Software  LLOYDS METALS

Excellent diversification

The 3 months correlation between California and LLOYDS is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding California Software 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 California Software 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 California Software 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 California Software i.e., California Software and LLOYDS METALS go up and down completely randomly.

Pair Corralation between California Software and LLOYDS METALS

Assuming the 90 days trading horizon California Software is expected to under-perform the LLOYDS METALS. But the stock apears to be less risky and, when comparing its historical volatility, California Software is 1.02 times less risky than LLOYDS METALS. The stock trades about -0.19 of its potential returns per unit of risk. The LLOYDS METALS AND is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  87,120  in LLOYDS METALS AND on September 23, 2024 and sell it today you would earn a total of  26,380  from holding LLOYDS METALS AND or generate 30.28% return on investment over 90 days.

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

California Software  vs.  LLOYDS METALS AND

California Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

LLOYDS METALS AND

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with California Software and LLOYDS METALS

The main advantage of trading using opposite California Software and LLOYDS METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Software 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 California Software 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.