Correlation Between Lucara Diamond and Mantaro Silver

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

Diversification Opportunities for Lucara Diamond and Mantaro Silver

0.3

Correlation Coefficient

Lucara Diamond  Mantaro Silver

Weak diversification

The 3 months correlation between Lucara and Mantaro is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Mantaro Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mantaro Silver 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 Mantaro Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mantaro Silver Corp has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Mantaro Silver go up and down completely randomly.

Pair Corralation between Lucara Diamond and Mantaro Silver

Assuming the 90 days horizon Lucara Diamond Corp is expected to under-perform the Mantaro Silver. In addition to that, Lucara Diamond is 2.41 times more volatile than Mantaro Silver Corp. It trades about -0.15 of its total potential returns per unit of risk. Mantaro Silver Corp is currently generating about -0.22 per unit of volatility. If you would invest  3.00  in Mantaro Silver Corp on October 23, 2024 and sell it today you would lose (0.23) from holding Mantaro Silver Corp or give up 7.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Lucara Diamond Corp  vs.  Mantaro Silver Corp

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mantaro Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mantaro Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lucara Diamond and Mantaro Silver

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

The idea behind Lucara Diamond Corp and Mantaro Silver 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.