Correlation Between Lucara Diamond and Adamera Minerals

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

Diversification Opportunities for Lucara Diamond and Adamera Minerals

-0.28

Correlation Coefficient

Lucara Diamond  Adamera Minerals

Very good diversification

The 3 months correlation between Lucara and Adamera is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Adamera Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamera Minerals Corp 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 Adamera Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamera Minerals Corp has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Adamera Minerals go up and down completely randomly.

Pair Corralation between Lucara Diamond and Adamera Minerals

If you would invest  2.00  in Adamera Minerals Corp on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Adamera Minerals Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Lucara Diamond Corp  vs.  Adamera Minerals Corp

Lucara Diamond Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lucara Diamond Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lucara Diamond is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Adamera Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adamera Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Adamera Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lucara Diamond and Adamera Minerals

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

The idea behind Lucara Diamond Corp and Adamera Minerals Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.