Correlation Between Diamond Fields and Advantage Solutions

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

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

Diversification Opportunities for Diamond Fields and Advantage Solutions

0.4

Correlation Coefficient

Diamond Fields  Advantage Solutions

Very weak diversification

The 3 months correlation between Diamond and Advantage is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and Diamond Fields 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 Diamond Fields Resources are associated (or correlated) with Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of Diamond Fields i.e., Diamond Fields and Advantage Solutions go up and down completely randomly.

Pair Corralation between Diamond Fields and Advantage Solutions

Assuming the 90 days horizon Diamond Fields Resources is expected to under-perform the Advantage Solutions. But the pink sheet apears to be less risky and, when comparing its historical volatility, Diamond Fields Resources is 2.37 times less risky than Advantage Solutions. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Advantage Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.27  in Advantage Solutions on December 30, 2024 and sell it today you would lose (0.07) from holding Advantage Solutions or give up 5.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Diamond Fields Resources  vs.  Advantage Solutions

Diamond Fields Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Fields Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Advantage Solutions

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamond Fields and Advantage Solutions

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

The idea behind Diamond Fields Resources and Advantage Solutions 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.