Correlation Between Acast AB and Lucara Diamond

Can any of the company-specific risk be diversified away by investing in both Acast AB and Lucara Diamond 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 Acast AB and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acast AB and Lucara Diamond Corp, you can compare the effects of market volatilities on Acast AB and Lucara Diamond 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 Acast AB with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acast AB and Lucara Diamond.

Diversification Opportunities for Acast AB and Lucara Diamond

-0.25

Correlation Coefficient

Acast AB  Lucara Diamond

Very good diversification

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

Pair Corralation between Acast AB and Lucara Diamond

Assuming the 90 days trading horizon Acast AB is expected to generate 1.0 times more return on investment than Lucara Diamond. However, Acast AB is 1.0 times less risky than Lucara Diamond. It trades about 0.08 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.01 per unit of risk. If you would invest  555.00  in Acast AB on September 28, 2024 and sell it today you would earn a total of  1,030  from holding Acast AB or generate 185.59% return on investment over 90 days.

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

Acast AB  vs.  Lucara Diamond Corp

Acast AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acast AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Acast AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lucara Diamond Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lucara Diamond Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Lucara Diamond may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Acast AB and Lucara Diamond

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

The idea behind Acast AB and Lucara Diamond Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.