Correlation Between Diamond Fields and Petra Diamonds
Can any of the company-specific risk be diversified away by investing in both Diamond Fields and Petra Diamonds 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 Diamond Fields and Petra Diamonds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Fields Resources and Petra Diamonds Limited, you can compare the effects of market volatilities on Diamond Fields and Petra Diamonds 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 Diamond Fields with a short position of Petra Diamonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Fields and Petra Diamonds.
Diversification Opportunities for Diamond Fields and Petra Diamonds
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Diamond and Petra is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Petra Diamonds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petra Diamonds and Diamond Fields 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 Diamond Fields Resources are associated (or correlated) with Petra Diamonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petra Diamonds has no effect on the direction of Diamond Fields i.e., Diamond Fields and Petra Diamonds go up and down completely randomly.
Pair Corralation between Diamond Fields and Petra Diamonds
Assuming the 90 days horizon Diamond Fields Resources is expected to generate 0.04 times more return on investment than Petra Diamonds. However, Diamond Fields Resources is 27.86 times less risky than Petra Diamonds. It trades about 0.12 of its potential returns per unit of risk. Petra Diamonds Limited is currently generating about -0.21 per unit of risk. If you would invest 2.00 in Diamond Fields Resources on September 5, 2024 and sell it today you would earn a total of 0.01 from holding Diamond Fields Resources or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Diamond Fields Resources vs. Petra Diamonds Limited
Performance |
| Timeline |
| Diamond Fields Resources |
| Petra Diamonds |
Diamond Fields and Petra Diamonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Fields and Petra Diamonds
The main advantage of trading using opposite Diamond Fields and Petra Diamonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Fields position performs unexpectedly, Petra Diamonds 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 Petra Diamonds will offset losses from the drop in Petra Diamonds' long position.| Diamond Fields vs. Advantage Solutions | Diamond Fields vs. Atlas Corp | Diamond Fields vs. PureCycle Technologies | Diamond Fields vs. WM Technology |
| Petra Diamonds vs. Star Royalties | Petra Diamonds vs. Defiance Silver Corp | Petra Diamonds vs. Diamond Fields Resources | Petra Diamonds vs. GoGold Resources |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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