Correlation Between Lundin Mining and Taiwan Semiconductor
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Taiwan Semiconductor 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 Lundin Mining and Taiwan Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining Corp and Taiwan Semiconductor Manufacturing, you can compare the effects of market volatilities on Lundin Mining and Taiwan Semiconductor 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 Lundin Mining with a short position of Taiwan Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Taiwan Semiconductor.
Diversification Opportunities for Lundin Mining and Taiwan Semiconductor
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lundin and Taiwan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Taiwan Semiconductor Manufactu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Semiconductor and Lundin Mining 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 Lundin Mining Corp are associated (or correlated) with Taiwan Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Semiconductor has no effect on the direction of Lundin Mining i.e., Lundin Mining and Taiwan Semiconductor go up and down completely randomly.
Pair Corralation between Lundin Mining and Taiwan Semiconductor
Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the Taiwan Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Mining Corp is 2.12 times less risky than Taiwan Semiconductor. The stock trades about -0.15 of its potential returns per unit of risk. The Taiwan Semiconductor Manufacturing is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 20,490 in Taiwan Semiconductor Manufacturing on November 4, 2024 and sell it today you would earn a total of 860.00 from holding Taiwan Semiconductor Manufacturing or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining Corp vs. Taiwan Semiconductor Manufactu
Performance |
| Timeline |
| Lundin Mining Corp |
| Taiwan Semiconductor |
Lundin Mining and Taiwan Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Taiwan Semiconductor
The main advantage of trading using opposite Lundin Mining and Taiwan Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Taiwan Semiconductor 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 Taiwan Semiconductor will offset losses from the drop in Taiwan Semiconductor's long position.| Lundin Mining vs. Cornish Metals | Lundin Mining vs. GoldMining | Lundin Mining vs. Eastinco Mining Exploration | Lundin Mining vs. BW Offshore |
| Taiwan Semiconductor vs. Morgan Advanced Materials | Taiwan Semiconductor vs. Capital Drilling | Taiwan Semiconductor vs. Regions Financial Corp | Taiwan Semiconductor vs. Commerzbank AG |
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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