Correlation Between LLOYDS METALS and AAA Technologies

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

Diversification Opportunities for LLOYDS METALS and AAA Technologies

0.56

Correlation Coefficient

LLOYDS METALS  AAA Technologies

Very weak diversification

The 3 months correlation between LLOYDS and AAA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and AAA Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAA 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 AAA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAA Technologies has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and AAA Technologies go up and down completely randomly.

Pair Corralation between LLOYDS METALS and AAA Technologies

Assuming the 90 days trading horizon LLOYDS METALS is expected to generate 1.57 times less return on investment than AAA Technologies. In addition to that, LLOYDS METALS is 1.02 times more volatile than AAA Technologies Limited. It trades about 0.09 of its total potential returns per unit of risk. AAA Technologies Limited is currently generating about 0.14 per unit of volatility. If you would invest  7,885  in AAA Technologies Limited on April 22, 2025 and sell it today you would earn a total of  1,594  from holding AAA Technologies Limited or generate 20.22% return on investment over 90 days.

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

LLOYDS METALS AND  vs.  AAA Technologies Limited

LLOYDS METALS AND

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, LLOYDS METALS may actually be approaching a critical reversion point that can send shares even higher in August 2025.

AAA Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAA Technologies Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, AAA Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LLOYDS METALS and AAA Technologies

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

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