Correlation Between Lucara Diamond and Clean Motion
Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and Clean Motion 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 Clean Motion 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 Clean Motion AB, you can compare the effects of market volatilities on Lucara Diamond and Clean Motion 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 Clean Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and Clean Motion.
Diversification Opportunities for Lucara Diamond and Clean Motion
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lucara and Clean is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Clean Motion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Motion 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 Clean Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Motion AB has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Clean Motion go up and down completely randomly.
Pair Corralation between Lucara Diamond and Clean Motion
Assuming the 90 days trading horizon Lucara Diamond Corp is expected to generate 1.07 times more return on investment than Clean Motion. However, Lucara Diamond is 1.07 times more volatile than Clean Motion AB. It trades about -0.01 of its potential returns per unit of risk. Clean Motion AB is currently generating about -0.36 per unit of risk. If you would invest 387.00 in Lucara Diamond Corp on August 28, 2024 and sell it today you would lose (12.00) from holding Lucara Diamond Corp or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucara Diamond Corp vs. Clean Motion AB
Performance |
| Timeline |
| Lucara Diamond Corp |
| Clean Motion AB |
Lucara Diamond and Clean Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucara Diamond and Clean Motion
The main advantage of trading using opposite Lucara Diamond and Clean Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucara Diamond position performs unexpectedly, Clean Motion 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 Clean Motion will offset losses from the drop in Clean Motion's long position.| Lucara Diamond vs. Lundin Mining | Lucara Diamond vs. Africa Oil Corp | Lucara Diamond vs. International Petroleum | Lucara Diamond vs. Boliden AB |
| Clean Motion vs. Volvo Car AB | Clean Motion vs. KABE Group AB | Clean Motion vs. IAR Systems Group | Clean Motion vs. Norva24 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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