Correlation Between Diamond Fields and Saville Resources

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

Diversification Opportunities for Diamond Fields and Saville Resources

-0.71

Correlation Coefficient

Diamond Fields  Saville Resources

Pay attention - limited upside

The 3 months correlation between Diamond and Saville is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Saville Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saville Resources 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 Saville Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saville Resources has no effect on the direction of Diamond Fields i.e., Diamond Fields and Saville Resources go up and down completely randomly.

Pair Corralation between Diamond Fields and Saville Resources

Assuming the 90 days horizon Diamond Fields Resources is expected to under-perform the Saville Resources. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Fields Resources is 1.27 times less risky than Saville Resources. The stock trades about -0.11 of its potential returns per unit of risk. The Saville Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Saville Resources on October 20, 2024 and sell it today you would earn a total of  6.00  from holding Saville Resources or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	57.89%
Values	Daily Returns

Diamond Fields Resources  vs.  Saville Resources

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.

Saville Resources

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Saville Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Saville Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamond Fields and Saville Resources

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

The idea behind Diamond Fields Resources and Saville Resources 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .