Correlation Between Embellence Group and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Embellence Group 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 Embellence Group and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embellence Group AB and Lucara Diamond Corp, you can compare the effects of market volatilities on Embellence Group 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 Embellence Group with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embellence Group and Lucara Diamond.
Diversification Opportunities for Embellence Group and Lucara Diamond
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Embellence and Lucara is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group AB 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 Embellence Group 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 Embellence Group AB 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 Embellence Group i.e., Embellence Group and Lucara Diamond go up and down completely randomly.
Pair Corralation between Embellence Group and Lucara Diamond
Assuming the 90 days trading horizon Embellence Group AB is expected to generate 0.57 times more return on investment than Lucara Diamond. However, Embellence Group AB is 1.75 times less risky than Lucara Diamond. It trades about 0.09 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.04 per unit of risk. If you would invest 1,885 in Embellence Group AB on September 24, 2024 and sell it today you would earn a total of 1,175 from holding Embellence Group AB or generate 62.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embellence Group AB vs. Lucara Diamond Corp
Performance |
| Timeline |
| Embellence Group |
| Lucara Diamond Corp |
Embellence Group and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embellence Group and Lucara Diamond
The main advantage of trading using opposite Embellence Group and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embellence Group 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.| Embellence Group vs. Rugvista Group AB | Embellence Group vs. Nimbus Group AB | Embellence Group vs. Desenio Group AB | Embellence Group vs. Idun Industrier AB |
| Lucara Diamond vs. Leading Edge Materials | Lucara Diamond vs. Alzinova AB | Lucara Diamond vs. SaltX Technology Holding | Lucara Diamond vs. Mekonomen AB |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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