Correlation Between Lucara Diamond and Goodbye Kansas

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

Diversification Opportunities for Lucara Diamond and Goodbye Kansas

0.31

Correlation Coefficient

Lucara Diamond  Goodbye Kansas

Weak diversification

The 3 months correlation between Lucara and Goodbye is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Goodbye Kansas Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodbye Kansas Group 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 Goodbye Kansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodbye Kansas Group has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Goodbye Kansas go up and down completely randomly.

Pair Corralation between Lucara Diamond and Goodbye Kansas

Assuming the 90 days trading horizon Lucara Diamond is expected to generate 4.7 times less return on investment than Goodbye Kansas. But when comparing it to its historical volatility, Lucara Diamond Corp is 3.45 times less risky than Goodbye Kansas. It trades about 0.06 of its potential returns per unit of risk. Goodbye Kansas Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Goodbye Kansas Group on September 28, 2024 and sell it today you would earn a total of  64.00  from holding Goodbye Kansas Group or generate 77.11% return on investment over 90 days.

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

Lucara Diamond Corp  vs.  Goodbye Kansas Group

Lucara Diamond Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lucara Diamond Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Lucara Diamond may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goodbye Kansas Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goodbye Kansas Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Goodbye Kansas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lucara Diamond and Goodbye Kansas

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

The idea behind Lucara Diamond Corp and Goodbye Kansas Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.