Correlation Between Lucara Diamond and Cyber Security

Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and Cyber Security 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 Cyber Security 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 Cyber Security 1, you can compare the effects of market volatilities on Lucara Diamond and Cyber Security 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 Cyber Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and Cyber Security.

Diversification Opportunities for Lucara Diamond and Cyber Security

-0.6

Correlation Coefficient

Lucara Diamond  Cyber Security

Excellent diversification

The 3 months correlation between Lucara and Cyber is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Cyber Security 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Security 1 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 Cyber Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Security 1 has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Cyber Security go up and down completely randomly.

Pair Corralation between Lucara Diamond and Cyber Security

Assuming the 90 days trading horizon Lucara Diamond Corp is expected to under-perform the Cyber Security. But the stock apears to be less risky and, when comparing its historical volatility, Lucara Diamond Corp is 1.75 times less risky than Cyber Security. The stock trades about -0.01 of its potential returns per unit of risk. The Cyber Security 1 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.67  in Cyber Security 1 on October 3, 2024 and sell it today you would lose (0.73) from holding Cyber Security 1 or give up 43.71% of portfolio value over 90 days.

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

Lucara Diamond Corp  vs.  Cyber Security 1

Lucara Diamond Corp

Risk-Adjusted Performance

0 of 100

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 comparatively stable fundamental indicators, Lucara Diamond is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cyber Security 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyber Security 1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lucara Diamond and Cyber Security

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

The idea behind Lucara Diamond Corp and Cyber Security 1 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .