Correlation Between Orrn Energy and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Orrn Energy 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 Orrn Energy and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orrn Energy AB and Lucara Diamond Corp, you can compare the effects of market volatilities on Orrn Energy 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 Orrn Energy with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orrn Energy and Lucara Diamond.
Diversification Opportunities for Orrn Energy and Lucara Diamond
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Orrn and Lucara is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Orrn Energy 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 Orrn Energy 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 Orrn Energy 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 Orrn Energy i.e., Orrn Energy and Lucara Diamond go up and down completely randomly.
Pair Corralation between Orrn Energy and Lucara Diamond
Assuming the 90 days trading horizon Orrn Energy AB is expected to under-perform the Lucara Diamond. But the stock apears to be less risky and, when comparing its historical volatility, Orrn Energy AB is 1.57 times less risky than Lucara Diamond. The stock trades about -0.17 of its potential returns per unit of risk. The Lucara Diamond Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 319.00 in Lucara Diamond Corp on August 28, 2024 and sell it today you would earn a total of 56.00 from holding Lucara Diamond Corp or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orrn Energy AB vs. Lucara Diamond Corp
Performance |
| Timeline |
| Orrn Energy AB |
| Lucara Diamond Corp |
Orrn Energy and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orrn Energy and Lucara Diamond
The main advantage of trading using opposite Orrn Energy and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orrn Energy 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.| Orrn Energy vs. ZAZZ Energy of | Orrn Energy vs. Enersize Oy | Orrn Energy vs. Mekonomen AB | Orrn Energy vs. Embellence Group AB |
| Lucara Diamond vs. Lundin Mining | Lucara Diamond vs. Africa Oil Corp | Lucara Diamond vs. International Petroleum | Lucara Diamond vs. Boliden 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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