Correlation Between SaltX Technology and Lucara Diamond

Can any of the company-specific risk be diversified away by investing in both SaltX Technology and Lucara Diamond 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 SaltX Technology and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SaltX Technology Holding and Lucara Diamond Corp, you can compare the effects of market volatilities on SaltX Technology and Lucara Diamond 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 SaltX Technology with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of SaltX Technology and Lucara Diamond.

Diversification Opportunities for SaltX Technology and Lucara Diamond

0.22

Correlation Coefficient

SaltX Technology  Lucara Diamond

Modest diversification

The 3 months correlation between SaltX and Lucara is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SaltX Technology Holding and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp and SaltX Technology 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 SaltX Technology Holding are associated (or correlated) with Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of SaltX Technology i.e., SaltX Technology and Lucara Diamond go up and down completely randomly.

Pair Corralation between SaltX Technology and Lucara Diamond

Assuming the 90 days trading horizon SaltX Technology Holding is expected to generate 1.79 times more return on investment than Lucara Diamond. However, SaltX Technology is 1.79 times more volatile than Lucara Diamond Corp. It trades about 0.03 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.02 per unit of risk. If you would invest  332.00  in SaltX Technology Holding on October 2, 2024 and sell it today you would lose (8.00) from holding SaltX Technology Holding or give up 2.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

SaltX Technology Holding  vs.  Lucara Diamond Corp

SaltX Technology Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SaltX Technology Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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. In spite of comparatively stable fundamental indicators, Lucara Diamond is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SaltX Technology and Lucara Diamond

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

The idea behind SaltX Technology Holding and Lucara Diamond 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.