Correlation Between Arctic Gold and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Arctic Gold 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 Arctic Gold and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Gold Publ and Lucara Diamond Corp, you can compare the effects of market volatilities on Arctic Gold 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 Arctic Gold with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Gold and Lucara Diamond.
Diversification Opportunities for Arctic Gold and Lucara Diamond
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arctic and Lucara is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Gold Publ 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 Arctic Gold 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 Arctic Gold Publ 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 Arctic Gold i.e., Arctic Gold and Lucara Diamond go up and down completely randomly.
Pair Corralation between Arctic Gold and Lucara Diamond
Assuming the 90 days trading horizon Arctic Gold is expected to generate 2.82 times less return on investment than Lucara Diamond. In addition to that, Arctic Gold is 1.65 times more volatile than Lucara Diamond Corp. It trades about 0.02 of its total potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.09 per unit of volatility. If you would invest 319.00 in Lucara Diamond Corp on August 28, 2024 and sell it today you would earn a total of 56.00 from holding Lucara Diamond Corp or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Arctic Gold Publ vs. Lucara Diamond Corp
Performance |
| Timeline |
| Arctic Gold Publ |
| Lucara Diamond Corp |
Arctic Gold and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Gold and Lucara Diamond
The main advantage of trading using opposite Arctic Gold and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Gold 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.| Arctic Gold vs. Svenska Aerogel Holding | Arctic Gold vs. Kancera AB | Arctic Gold vs. BIMobject AB | Arctic Gold vs. KABE Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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