Correlation Between Diamond Fields and Exchange Income

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

Diversification Opportunities for Diamond Fields and Exchange Income

-0.33

Correlation Coefficient

Diamond Fields  Exchange Income

Very good diversification

The 3 months correlation between Diamond and Exchange is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income 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 Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Diamond Fields i.e., Diamond Fields and Exchange Income go up and down completely randomly.

Pair Corralation between Diamond Fields and Exchange Income

Assuming the 90 days horizon Diamond Fields Resources is expected to under-perform the Exchange Income. In addition to that, Diamond Fields is 10.26 times more volatile than Exchange Income. It trades about -0.04 of its total potential returns per unit of risk. Exchange Income is currently generating about 0.04 per unit of volatility. If you would invest  5,412  in Exchange Income on October 25, 2024 and sell it today you would earn a total of  106.00  from holding Exchange Income or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Diamond Fields Resources  vs.  Exchange Income

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 weak 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.

Exchange Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Exchange Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Diamond Fields and Exchange Income

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

The idea behind Diamond Fields Resources and Exchange Income 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.