Correlation Between Diamond Fields and Medical Facilities

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

Diversification Opportunities for Diamond Fields and Medical Facilities

-0.41

Correlation Coefficient

Diamond Fields  Medical Facilities

Very good diversification

The 3 months correlation between Diamond and Medical is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Diamond Fields i.e., Diamond Fields and Medical Facilities go up and down completely randomly.

Pair Corralation between Diamond Fields and Medical Facilities

Assuming the 90 days horizon Diamond Fields Resources is expected to under-perform the Medical Facilities. In addition to that, Diamond Fields is 6.09 times more volatile than Medical Facilities. It trades about 0.0 of its total potential returns per unit of risk. Medical Facilities is currently generating about 0.11 per unit of volatility. If you would invest  754.00  in Medical Facilities on October 23, 2024 and sell it today you would earn a total of  896.00  from holding Medical Facilities or generate 118.83% return on investment over 90 days.

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

Diamond Fields Resources  vs.  Medical Facilities

Diamond Fields Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Fields Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Medical Facilities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Medical Facilities displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamond Fields and Medical Facilities

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

The idea behind Diamond Fields Resources and Medical Facilities 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.