Correlation Between Lucara Diamond and Senzime AB
Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and Senzime AB 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 Senzime AB 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 Senzime AB, you can compare the effects of market volatilities on Lucara Diamond and Senzime AB 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 Senzime AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and Senzime AB.
Diversification Opportunities for Lucara Diamond and Senzime AB
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lucara and Senzime is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Senzime AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senzime 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 Senzime AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senzime AB has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Senzime AB go up and down completely randomly.
Pair Corralation between Lucara Diamond and Senzime AB
Assuming the 90 days trading horizon Lucara Diamond Corp is expected to generate 0.87 times more return on investment than Senzime AB. However, Lucara Diamond Corp is 1.15 times less risky than Senzime AB. It trades about 0.08 of its potential returns per unit of risk. Senzime AB is currently generating about 0.04 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 | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lucara Diamond Corp vs. Senzime AB
Performance |
Timeline |
Lucara Diamond Corp |
Senzime AB |
Lucara Diamond and Senzime AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lucara Diamond and Senzime AB
The main advantage of trading using opposite Lucara Diamond and Senzime AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucara Diamond position performs unexpectedly, Senzime AB 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 Senzime AB will offset losses from the drop in Senzime AB's long position.Lucara Diamond vs. Leading Edge Materials | Lucara Diamond vs. Alzinova AB | Lucara Diamond vs. SaltX Technology Holding | Lucara Diamond vs. Mekonomen AB |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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