Correlation Between Lucara Diamond and PolyPlank Publ

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

Diversification Opportunities for Lucara Diamond and PolyPlank Publ

-0.68

Correlation Coefficient

Lucara Diamond  PolyPlank Publ

Excellent diversification

The 3 months correlation between Lucara and PolyPlank is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and PolyPlank publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PolyPlank publ AB 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 PolyPlank Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PolyPlank publ AB has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and PolyPlank Publ go up and down completely randomly.

Pair Corralation between Lucara Diamond and PolyPlank Publ

Assuming the 90 days trading horizon Lucara Diamond Corp is expected to generate 0.29 times more return on investment than PolyPlank Publ. However, Lucara Diamond Corp is 3.45 times less risky than PolyPlank Publ. It trades about 0.08 of its potential returns per unit of risk. PolyPlank publ AB is currently generating about -0.1 per unit of risk. If you would invest  372.00  in Lucara Diamond Corp on September 23, 2024 and sell it today you would earn a total of  11.00  from holding Lucara Diamond Corp or generate 2.96% return on investment over 90 days.

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

Lucara Diamond Corp  vs.  PolyPlank publ AB

Lucara Diamond Corp

Risk-Adjusted Performance

5 of 100

Modest

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

PolyPlank publ AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PolyPlank publ AB 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 basic indicators remain comparatively stable which may send shares a bit higher in January 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 PolyPlank Publ

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

The idea behind Lucara Diamond Corp and PolyPlank publ AB 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.