Correlation Between LLOYDS METALS and Lemon Tree

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

Diversification Opportunities for LLOYDS METALS and Lemon Tree

0.25

Correlation Coefficient

LLOYDS METALS  Lemon Tree

Modest diversification

The 3 months correlation between LLOYDS and Lemon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and Lemon Tree Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemon Tree Hotels 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 Lemon Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemon Tree Hotels has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Lemon Tree go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Lemon Tree

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 1.13 times more return on investment than Lemon Tree. However, LLOYDS METALS is 1.13 times more volatile than Lemon Tree Hotels. It trades about 0.1 of its potential returns per unit of risk. Lemon Tree Hotels is currently generating about 0.05 per unit of risk. If you would invest  128,854  in LLOYDS METALS AND on April 21, 2025 and sell it today you would earn a total of  18,406  from holding LLOYDS METALS AND or generate 14.28% return on investment over 90 days.

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

LLOYDS METALS AND  vs.  Lemon Tree Hotels

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

Lemon Tree Hotels

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lemon Tree Hotels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Lemon Tree is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LLOYDS METALS and Lemon Tree

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

The idea behind LLOYDS METALS AND and Lemon Tree Hotels 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..