Correlation Between Diamond Fields and Lassonde Industries

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

Diversification Opportunities for Diamond Fields and Lassonde Industries

-0.43

Correlation Coefficient

Diamond Fields  Lassonde Industries

Very good diversification

The 3 months correlation between Diamond and Lassonde is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Lassonde Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lassonde Industries 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 Lassonde Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lassonde Industries has no effect on the direction of Diamond Fields i.e., Diamond Fields and Lassonde Industries go up and down completely randomly.

Pair Corralation between Diamond Fields and Lassonde Industries

Assuming the 90 days horizon Diamond Fields Resources is expected to generate 6.85 times more return on investment than Lassonde Industries. However, Diamond Fields is 6.85 times more volatile than Lassonde Industries. It trades about 0.17 of its potential returns per unit of risk. Lassonde Industries is currently generating about 0.05 per unit of risk. If you would invest  1.50  in Diamond Fields Resources on December 11, 2024 and sell it today you would earn a total of  0.50  from holding Diamond Fields Resources or generate 33.33% 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.  Lassonde Industries

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. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Lassonde Industries

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Diamond Fields and Lassonde Industries

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

The idea behind Diamond Fields Resources and Lassonde Industries 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.