Correlation Between Indutrade and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Indutrade and Lundin Mining 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 Indutrade and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Lundin Mining Corp, you can compare the effects of market volatilities on Indutrade and Lundin Mining 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 Indutrade with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Lundin Mining.
Diversification Opportunities for Indutrade and Lundin Mining
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indutrade and Lundin is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp and Indutrade 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 Indutrade AB are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Indutrade i.e., Indutrade and Lundin Mining go up and down completely randomly.
Pair Corralation between Indutrade and Lundin Mining
Assuming the 90 days trading horizon Indutrade AB is expected to generate 0.75 times more return on investment than Lundin Mining. However, Indutrade AB is 1.34 times less risky than Lundin Mining. It trades about 0.22 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.11 per unit of risk. If you would invest 28,200 in Indutrade AB on November 2, 2024 and sell it today you would earn a total of 2,170 from holding Indutrade AB or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. Lundin Mining Corp
Performance |
| Timeline |
| Indutrade AB |
| Lundin Mining Corp |
Indutrade and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Lundin Mining
The main advantage of trading using opposite Indutrade and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Indutrade vs. Capital Drilling | Indutrade vs. Trainline Plc | Indutrade vs. Bell Food Group | Indutrade vs. Axfood AB |
| Lundin Mining vs. Gaming Realms plc | Lundin Mining vs. Impax Asset Management | Lundin Mining vs. Creo Medical Group | Lundin Mining vs. Games Workshop Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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