Correlation Between Lucara Diamond and Chordate Medical

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

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

Diversification Opportunities for Lucara Diamond and Chordate Medical

0.24

Correlation Coefficient

Lucara Diamond  Chordate Medical

Modest diversification

The 3 months correlation between Lucara and Chordate is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Chordate Medical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chordate Medical Holding and Lucara Diamond 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 Lucara Diamond Corp are associated (or correlated) with Chordate Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chordate Medical Holding has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Chordate Medical go up and down completely randomly.

Pair Corralation between Lucara Diamond and Chordate Medical

Assuming the 90 days trading horizon Lucara Diamond Corp is expected to under-perform the Chordate Medical. But the stock apears to be less risky and, when comparing its historical volatility, Lucara Diamond Corp is 2.95 times less risky than Chordate Medical. The stock trades about -0.08 of its potential returns per unit of risk. The Chordate Medical Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  898.00  in Chordate Medical Holding on December 28, 2024 and sell it today you would lose (308.00) from holding Chordate Medical Holding or give up 34.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Lucara Diamond Corp  vs.  Chordate Medical Holding

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.

Chordate Medical Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chordate Medical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Chordate Medical is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lucara Diamond and Chordate Medical

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

The idea behind Lucara Diamond Corp and Chordate Medical Holding 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.