Correlation Between ASSA ABLOY and Lucara Diamond

Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY 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 ASSA ABLOY and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASSA ABLOY AB and Lucara Diamond Corp, you can compare the effects of market volatilities on ASSA ABLOY 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 ASSA ABLOY with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Lucara Diamond.

Diversification Opportunities for ASSA ABLOY and Lucara Diamond

-0.64

Correlation Coefficient

ASSA ABLOY  Lucara Diamond

Excellent diversification

The 3 months correlation between ASSA and Lucara is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY 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 ASSA ABLOY 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 ASSA ABLOY 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 ASSA ABLOY i.e., ASSA ABLOY and Lucara Diamond go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Lucara Diamond

Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.39 times more return on investment than Lucara Diamond. However, ASSA ABLOY AB is 2.59 times less risky than Lucara Diamond. It trades about 0.14 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about -0.2 per unit of risk. If you would invest  28,260  in ASSA ABLOY AB on April 24, 2025 and sell it today you would earn a total of  3,280  from holding ASSA ABLOY AB or generate 11.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ASSA ABLOY AB  vs.  Lucara Diamond Corp

ASSA ABLOY AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASSA ABLOY AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASSA ABLOY may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Lucara Diamond Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lucara Diamond Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ASSA ABLOY and Lucara Diamond

The main advantage of trading using opposite ASSA ABLOY and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY 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.

The idea behind ASSA ABLOY AB and Lucara Diamond Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.