Correlation Between LLOYDS METALS and Agarwal Industrial

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

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

Diversification Opportunities for LLOYDS METALS and Agarwal Industrial

-0.72

Correlation Coefficient

LLOYDS METALS  Agarwal Industrial

Pay attention - limited upside

The 3 months correlation between LLOYDS and Agarwal is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and LLOYDS METALS 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 LLOYDS METALS AND are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Agarwal Industrial go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Agarwal Industrial

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 0.99 times more return on investment than Agarwal Industrial. However, LLOYDS METALS AND is 1.01 times less risky than Agarwal Industrial. It trades about 0.16 of its potential returns per unit of risk. Agarwal Industrial is currently generating about -0.02 per unit of risk. If you would invest  77,445  in LLOYDS METALS AND on August 30, 2024 and sell it today you would earn a total of  19,425  from holding LLOYDS METALS AND or generate 25.08% return on investment over 90 days.

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

LLOYDS METALS AND  vs.  Agarwal Industrial

LLOYDS METALS AND

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 12 (%) 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.

Agarwal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agarwal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Agarwal Industrial is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LLOYDS METALS and Agarwal Industrial

The main advantage of trading using opposite LLOYDS METALS and Agarwal Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LLOYDS METALS position performs unexpectedly, Agarwal Industrial 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 Agarwal Industrial will offset losses from the drop in Agarwal Industrial's long position.

The idea behind LLOYDS METALS AND and Agarwal Industrial 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.