Correlation Between Lundin Mining and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Odfjell Drilling 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 Odfjell Drilling 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 Odfjell Drilling, you can compare the effects of market volatilities on Lundin Mining and Odfjell Drilling 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 Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Odfjell Drilling.
Diversification Opportunities for Lundin Mining and Odfjell Drilling
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lundin and Odfjell is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling 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 Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of Lundin Mining i.e., Lundin Mining and Odfjell Drilling go up and down completely randomly.
Pair Corralation between Lundin Mining and Odfjell Drilling
Assuming the 90 days trading horizon Lundin Mining is expected to generate 1.16 times less return on investment than Odfjell Drilling. In addition to that, Lundin Mining is 1.22 times more volatile than Odfjell Drilling. It trades about 0.06 of its total potential returns per unit of risk. Odfjell Drilling is currently generating about 0.08 per unit of volatility. If you would invest 2,207 in Odfjell Drilling on August 30, 2024 and sell it today you would earn a total of 2,568 from holding Odfjell Drilling or generate 116.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Lundin Mining Corp vs. Odfjell Drilling
Performance |
| Timeline |
| Lundin Mining Corp |
| Odfjell Drilling |
Lundin Mining and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Odfjell Drilling
The main advantage of trading using opposite Lundin Mining and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Odfjell Drilling 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 Odfjell Drilling will offset losses from the drop in Odfjell Drilling's long position.| Lundin Mining vs. Lendinvest PLC | Lundin Mining vs. Neometals | Lundin Mining vs. Albion Technology General | Lundin Mining vs. Jupiter Fund Management |
| Odfjell Drilling vs. Lendinvest PLC | Odfjell Drilling vs. Neometals | Odfjell Drilling vs. Albion Technology General | Odfjell Drilling vs. Jupiter Fund Management |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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