Correlation Between Inwido AB and Lucara Diamond

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

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

Diversification Opportunities for Inwido AB and Lucara Diamond

-0.69

Correlation Coefficient

Inwido AB  Lucara Diamond

Excellent diversification

The 3 months correlation between Inwido and Lucara is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Inwido AB and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp and Inwido AB 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 Inwido AB are associated (or correlated) with Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Inwido AB i.e., Inwido AB and Lucara Diamond go up and down completely randomly.

Pair Corralation between Inwido AB and Lucara Diamond

Assuming the 90 days trading horizon Inwido AB is expected to generate 0.37 times more return on investment than Lucara Diamond. However, Inwido AB is 2.71 times less risky than Lucara Diamond. It trades about 0.1 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about -0.08 per unit of risk. If you would invest  18,550  in Inwido AB on December 30, 2024 and sell it today you would earn a total of  1,770  from holding Inwido AB or generate 9.54% return on investment over 90 days.

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

Inwido AB  vs.  Lucara Diamond Corp

Inwido AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inwido AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inwido AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lucara Diamond Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lucara Diamond Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Inwido AB and Lucara Diamond

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

The idea behind Inwido AB and Lucara Diamond Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.