Correlation Between Diamond Fields and Fresnillo PLC

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

Diversification Opportunities for Diamond Fields and Fresnillo PLC

-0.72

Correlation Coefficient

Diamond Fields  Fresnillo PLC

Pay attention - limited upside

The 3 months correlation between Diamond and Fresnillo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Fresnillo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresnillo PLC 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 Fresnillo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresnillo PLC has no effect on the direction of Diamond Fields i.e., Diamond Fields and Fresnillo PLC go up and down completely randomly.

Pair Corralation between Diamond Fields and Fresnillo PLC

Assuming the 90 days horizon Diamond Fields Resources is expected to under-perform the Fresnillo PLC. In addition to that, Diamond Fields is 2.57 times more volatile than Fresnillo PLC. It trades about -0.04 of its total potential returns per unit of risk. Fresnillo PLC is currently generating about 0.32 per unit of volatility. If you would invest  781.00  in Fresnillo PLC on December 30, 2024 and sell it today you would earn a total of  457.00  from holding Fresnillo PLC or generate 58.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Diamond Fields Resources  vs.  Fresnillo PLC

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.

Fresnillo PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fresnillo PLC are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fresnillo PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamond Fields and Fresnillo PLC

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

The idea behind Diamond Fields Resources and Fresnillo PLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.