Correlation Between LLOYDS METALS and GACM Technologies

Can any of the company-specific risk be diversified away by investing in both LLOYDS METALS and GACM Technologies 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 GACM Technologies 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 GACM Technologies Limited, you can compare the effects of market volatilities on LLOYDS METALS and GACM Technologies 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 GACM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LLOYDS METALS and GACM Technologies.

Diversification Opportunities for LLOYDS METALS and GACM Technologies

-0.75

Correlation Coefficient

LLOYDS METALS  GACM Technologies

Pay attention - limited upside

The 3 months correlation between LLOYDS and GACM is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and GACM Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GACM Technologies 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 GACM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GACM Technologies has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and GACM Technologies go up and down completely randomly.

Pair Corralation between LLOYDS METALS and GACM Technologies

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 0.77 times more return on investment than GACM Technologies. However, LLOYDS METALS AND is 1.29 times less risky than GACM Technologies. It trades about 0.27 of its potential returns per unit of risk. GACM Technologies Limited is currently generating about -0.16 per unit of risk. If you would invest  75,430  in LLOYDS METALS AND on September 12, 2024 and sell it today you would earn a total of  37,100  from holding LLOYDS METALS AND or generate 49.18% 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.  GACM Technologies Limited

LLOYDS METALS AND

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 20 (%) 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.

GACM Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GACM Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LLOYDS METALS and GACM Technologies

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

The idea behind LLOYDS METALS AND and GACM Technologies Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.