Correlation Between Lucara Diamond and 4C Group
Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and 4C Group 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 4C Group 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 4C Group AB, you can compare the effects of market volatilities on Lucara Diamond and 4C Group 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 4C Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and 4C Group.
Diversification Opportunities for Lucara Diamond and 4C Group
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lucara and 4C Group is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and 4C Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4C Group AB 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 4C Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4C Group AB has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and 4C Group go up and down completely randomly.
Pair Corralation between Lucara Diamond and 4C Group
Assuming the 90 days trading horizon Lucara Diamond Corp is expected to under-perform the 4C Group. But the stock apears to be less risky and, when comparing its historical volatility, Lucara Diamond Corp is 1.1 times less risky than 4C Group. The stock trades about -0.34 of its potential returns per unit of risk. The 4C Group AB is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,075 in 4C Group AB on October 12, 2024 and sell it today you would lose (45.00) from holding 4C Group AB or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucara Diamond Corp vs. 4C Group AB
Performance |
| Timeline |
| Lucara Diamond Corp |
| 4C Group AB |
Lucara Diamond and 4C Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucara Diamond and 4C Group
The main advantage of trading using opposite Lucara Diamond and 4C Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucara Diamond position performs unexpectedly, 4C Group 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 4C Group will offset losses from the drop in 4C Group's long position.| Lucara Diamond vs. Leading Edge Materials | Lucara Diamond vs. Alzinova AB | Lucara Diamond vs. SaltX Technology Holding | Lucara Diamond vs. KABE Group AB |
| 4C Group vs. B3 Consulting Group | 4C Group vs. Sleep Cycle AB | 4C Group vs. Avensia publ AB | 4C Group vs. CAG Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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