Correlation Between Lundin Mining and Capital Drilling
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Capital 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 Capital 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 Capital Drilling, you can compare the effects of market volatilities on Lundin Mining and Capital 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 Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Capital Drilling.
Diversification Opportunities for Lundin Mining and Capital Drilling
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lundin and Capital is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Lundin Mining i.e., Lundin Mining and Capital Drilling go up and down completely randomly.
Pair Corralation between Lundin Mining and Capital Drilling
Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 0.72 times more return on investment than Capital Drilling. However, Lundin Mining Corp is 1.39 times less risky than Capital Drilling. It trades about 0.05 of its potential returns per unit of risk. Capital Drilling is currently generating about -0.1 per unit of risk. If you would invest 9,583 in Lundin Mining Corp on October 23, 2024 and sell it today you would earn a total of 165.00 from holding Lundin Mining Corp or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lundin Mining Corp vs. Capital Drilling
Performance |
| Timeline |
| Lundin Mining Corp |
| Capital Drilling |
Lundin Mining and Capital Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Capital Drilling
The main advantage of trading using opposite Lundin Mining and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Capital 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 Capital Drilling will offset losses from the drop in Capital Drilling's long position.| Lundin Mining vs. Thor Mining PLC | Lundin Mining vs. Hecla Mining Co | Lundin Mining vs. Vienna Insurance Group | Lundin Mining vs. Eastinco Mining Exploration |
| Capital Drilling vs. Lundin Mining Corp | Capital Drilling vs. Odfjell Drilling | Capital Drilling vs. JD Sports Fashion | Capital Drilling vs. British American Tobacco |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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