Correlation Between Tata Steel and LLOYDS METALS

Can any of the company-specific risk be diversified away by investing in both Tata Steel and LLOYDS METALS 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 Tata Steel and LLOYDS METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tata Steel Limited and LLOYDS METALS AND, you can compare the effects of market volatilities on Tata Steel and LLOYDS METALS 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 Tata Steel with a short position of LLOYDS METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tata Steel and LLOYDS METALS.

Diversification Opportunities for Tata Steel and LLOYDS METALS

0.76

Correlation Coefficient

Tata Steel  LLOYDS METALS

Poor diversification

The 3 months correlation between Tata and LLOYDS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tata Steel Limited and LLOYDS METALS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LLOYDS METALS AND and Tata Steel 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 Tata Steel Limited are associated (or correlated) with LLOYDS METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LLOYDS METALS AND has no effect on the direction of Tata Steel i.e., Tata Steel and LLOYDS METALS go up and down completely randomly.

Pair Corralation between Tata Steel and LLOYDS METALS

Assuming the 90 days trading horizon Tata Steel Limited is expected to generate 0.64 times more return on investment than LLOYDS METALS. However, Tata Steel Limited is 1.56 times less risky than LLOYDS METALS. It trades about 0.19 of its potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.1 per unit of risk. If you would invest  13,632  in Tata Steel Limited on April 21, 2025 and sell it today you would earn a total of  2,605  from holding Tata Steel Limited or generate 19.11% return on investment over 90 days.

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

Tata Steel Limited  vs.  LLOYDS METALS AND

Tata Steel Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tata Steel Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tata Steel exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Tata Steel and LLOYDS METALS

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

The idea behind Tata Steel Limited and LLOYDS METALS AND 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.