Correlation Between Diamond Estates and Serina Therapeutics

Can any of the company-specific risk be diversified away by investing in both Diamond Estates and Serina Therapeutics 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 Estates and Serina Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diamond Estates Wines and Serina Therapeutics, you can compare the effects of market volatilities on Diamond Estates and Serina Therapeutics 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 Estates with a short position of Serina Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Estates and Serina Therapeutics.

Diversification Opportunities for Diamond Estates and Serina Therapeutics

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Correlation Coefficient

Diamond Estates  Serina Therapeutics

Pay attention - limited upside

The 3 months correlation between Diamond and Serina is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Estates Wines and Serina Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serina Therapeutics and Diamond Estates 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 Estates Wines are associated (or correlated) with Serina Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serina Therapeutics has no effect on the direction of Diamond Estates i.e., Diamond Estates and Serina Therapeutics go up and down completely randomly.

Pair Corralation between Diamond Estates and Serina Therapeutics

Assuming the 90 days horizon Diamond Estates Wines is expected to under-perform the Serina Therapeutics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Diamond Estates Wines is 1.82 times less risky than Serina Therapeutics. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Serina Therapeutics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,582  in Serina Therapeutics on October 10, 2024 and sell it today you would lose (2,103) from holding Serina Therapeutics or give up 81.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Diamond Estates Wines  vs.  Serina Therapeutics

Diamond Estates Wines

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Diamond Estates Wines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Diamond Estates is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Serina Therapeutics

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Serina Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Diamond Estates and Serina Therapeutics

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

The idea behind Diamond Estates Wines and Serina Therapeutics 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.