Correlation Between LLOYDS METALS and Lotus Eye

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

Diversification Opportunities for LLOYDS METALS and Lotus Eye

-0.43

Correlation Coefficient

LLOYDS METALS  Lotus Eye

Very good diversification

The 3 months correlation between LLOYDS and Lotus is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and Lotus Eye Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Eye Hospital 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 Lotus Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Eye Hospital has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Lotus Eye go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Lotus Eye

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 0.63 times more return on investment than Lotus Eye. However, LLOYDS METALS AND is 1.58 times less risky than Lotus Eye. It trades about 0.1 of its potential returns per unit of risk. Lotus Eye Hospital is currently generating about 0.0 per unit of risk. If you would invest  62,408  in LLOYDS METALS AND on September 4, 2024 and sell it today you would earn a total of  43,322  from holding LLOYDS METALS AND or generate 69.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

LLOYDS METALS AND  vs.  Lotus Eye Hospital

LLOYDS METALS AND

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 16 (%) 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.

Lotus Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotus Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Lotus Eye is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LLOYDS METALS and Lotus Eye

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

The idea behind LLOYDS METALS AND and Lotus Eye Hospital 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.