Correlation Between LLOYDS METALS and Black Box

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

Diversification Opportunities for LLOYDS METALS and Black Box

0.87

Correlation Coefficient

LLOYDS METALS  Black Box

Very poor diversification

The 3 months correlation between LLOYDS and Black is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and Black Box Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Box Limited 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 Black Box. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Box Limited has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Black Box go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Black Box

Assuming the 90 days trading horizon LLOYDS METALS is expected to generate 2.31 times less return on investment than Black Box. But when comparing it to its historical volatility, LLOYDS METALS AND is 1.4 times less risky than Black Box. It trades about 0.1 of its potential returns per unit of risk. Black Box Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  38,155  in Black Box Limited on April 20, 2025 and sell it today you would earn a total of  14,330  from holding Black Box Limited or generate 37.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

LLOYDS METALS AND  vs.  Black Box 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 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

Black Box Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Black Box Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Black Box unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LLOYDS METALS and Black Box

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

The idea behind LLOYDS METALS AND and Black Box 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.