Correlation Between Boliden AB and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both Boliden AB and Lynas Rare 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 Boliden AB and Lynas Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boliden AB ADR and Lynas Rare Earths, you can compare the effects of market volatilities on Boliden AB and Lynas Rare 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 Boliden AB with a short position of Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boliden AB and Lynas Rare.
Diversification Opportunities for Boliden AB and Lynas Rare
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boliden and Lynas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB ADR and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths and Boliden AB 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 Boliden AB ADR are associated (or correlated) with Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of Boliden AB i.e., Boliden AB and Lynas Rare go up and down completely randomly.
Pair Corralation between Boliden AB and Lynas Rare
Assuming the 90 days horizon Boliden AB ADR is expected to under-perform the Lynas Rare. In addition to that, Boliden AB is 1.12 times more volatile than Lynas Rare Earths. It trades about -0.15 of its total potential returns per unit of risk. Lynas Rare Earths is currently generating about -0.16 per unit of volatility. If you would invest 488.00 in Lynas Rare Earths on August 26, 2024 and sell it today you would lose (39.00) from holding Lynas Rare Earths or give up 7.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boliden AB ADR vs. Lynas Rare Earths
Performance |
| Timeline |
| Boliden AB ADR |
| Lynas Rare Earths |
Boliden AB and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boliden AB and Lynas Rare
The main advantage of trading using opposite Boliden AB and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare's long position.| Boliden AB vs. Norra Metals Corp | Boliden AB vs. ZincX Resources Corp | Boliden AB vs. Nuinsco Resources Limited | Boliden AB vs. South Star Battery |
| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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