Correlation Between Lucara Diamond and Sleep Cycle
Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and Sleep Cycle 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 Sleep Cycle 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 Sleep Cycle AB, you can compare the effects of market volatilities on Lucara Diamond and Sleep Cycle 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 Sleep Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and Sleep Cycle.
Diversification Opportunities for Lucara Diamond and Sleep Cycle
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lucara and Sleep is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Sleep Cycle AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Cycle 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 Sleep Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Cycle AB has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Sleep Cycle go up and down completely randomly.
Pair Corralation between Lucara Diamond and Sleep Cycle
Assuming the 90 days trading horizon Lucara Diamond Corp is expected to generate 2.06 times more return on investment than Sleep Cycle. However, Lucara Diamond is 2.06 times more volatile than Sleep Cycle AB. It trades about 0.07 of its potential returns per unit of risk. Sleep Cycle AB is currently generating about 0.03 per unit of risk. If you would invest 248.00 in Lucara Diamond Corp on October 13, 2024 and sell it today you would earn a total of 98.00 from holding Lucara Diamond Corp or generate 39.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucara Diamond Corp vs. Sleep Cycle AB
Performance |
| Timeline |
| Lucara Diamond Corp |
| Sleep Cycle AB |
Lucara Diamond and Sleep Cycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucara Diamond and Sleep Cycle
The main advantage of trading using opposite Lucara Diamond and Sleep Cycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucara Diamond position performs unexpectedly, Sleep Cycle 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 Sleep Cycle will offset losses from the drop in Sleep Cycle'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 |
| Sleep Cycle vs. FormPipe Software AB | Sleep Cycle vs. Cint Group AB | Sleep Cycle vs. Lime Technologies AB | Sleep Cycle vs. Micro Systemation 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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