Correlation Between Lundin Mining and Tata Steel
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Tata Steel 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 Tata Steel 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 Tata Steel Limited, you can compare the effects of market volatilities on Lundin Mining and Tata Steel 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 Tata Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Tata Steel.
Diversification Opportunities for Lundin Mining and Tata Steel
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lundin and Tata is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Tata Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Steel Limited 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 Tata Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Steel Limited has no effect on the direction of Lundin Mining i.e., Lundin Mining and Tata Steel go up and down completely randomly.
Pair Corralation between Lundin Mining and Tata Steel
Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 1.24 times more return on investment than Tata Steel. However, Lundin Mining is 1.24 times more volatile than Tata Steel Limited. It trades about 0.02 of its potential returns per unit of risk. Tata Steel Limited is currently generating about -0.07 per unit of risk. If you would invest 10,880 in Lundin Mining Corp on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Lundin Mining Corp or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining Corp vs. Tata Steel Limited
Performance |
| Timeline |
| Lundin Mining Corp |
| Tata Steel Limited |
Lundin Mining and Tata Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Tata Steel
The main advantage of trading using opposite Lundin Mining and Tata Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Tata Steel 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 Tata Steel will offset losses from the drop in Tata Steel's long position.| Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Hyundai Motor | Lundin Mining vs. Toyota Motor Corp |
| Tata Steel vs. Givaudan SA | Tata Steel vs. Antofagasta PLC | Tata Steel vs. Atalaya Mining | Tata Steel vs. Amaroq Minerals |
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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