Correlation Between INTER CARS and Lundin Energy
Can any of the company-specific risk be diversified away by investing in both INTER CARS and Lundin Energy 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 INTER CARS and Lundin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and Lundin Energy AB, you can compare the effects of market volatilities on INTER CARS and Lundin Energy 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 INTER CARS with a short position of Lundin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Lundin Energy.
Diversification Opportunities for INTER CARS and Lundin Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INTER and Lundin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Lundin Energy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Energy AB and INTER CARS 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 INTER CARS SA are associated (or correlated) with Lundin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Energy AB has no effect on the direction of INTER CARS i.e., INTER CARS and Lundin Energy go up and down completely randomly.
Pair Corralation between INTER CARS and Lundin Energy
Assuming the 90 days horizon INTER CARS SA is expected to under-perform the Lundin Energy. But the stock apears to be less risky and, when comparing its historical volatility, INTER CARS SA is 1.64 times less risky than Lundin Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Lundin Energy AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Lundin Energy AB on September 2, 2024 and sell it today you would lose (4.00) from holding Lundin Energy AB or give up 6.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. Lundin Energy AB
Performance |
| Timeline |
| INTER CARS SA |
| Lundin Energy AB |
INTER CARS and Lundin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Lundin Energy
The main advantage of trading using opposite INTER CARS and Lundin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, Lundin Energy 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 Energy will offset losses from the drop in Lundin Energy's long position.| INTER CARS vs. CosmoSteel Holdings Limited | INTER CARS vs. MagnaChip Semiconductor Corp | INTER CARS vs. Nordic Semiconductor ASA | INTER CARS vs. Tianjin Capital Environmental |
| Lundin Energy vs. Iridium Communications | Lundin Energy vs. Spirent Communications plc | Lundin Energy vs. MTI WIRELESS EDGE | Lundin Energy vs. Salesforce |
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 Correlations module to find global opportunities by holding instruments from different markets.
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