Correlation Between FormPipe Software and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both FormPipe Software and Lundin Mining 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 FormPipe Software and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FormPipe Software AB and Lundin Mining, you can compare the effects of market volatilities on FormPipe Software and Lundin Mining 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 FormPipe Software with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormPipe Software and Lundin Mining.
Diversification Opportunities for FormPipe Software and Lundin Mining
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between FormPipe and Lundin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding FormPipe Software AB and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and FormPipe Software 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 FormPipe Software AB are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining has no effect on the direction of FormPipe Software i.e., FormPipe Software and Lundin Mining go up and down completely randomly.
Pair Corralation between FormPipe Software and Lundin Mining
Assuming the 90 days trading horizon FormPipe Software is expected to generate 3.87 times less return on investment than Lundin Mining. But when comparing it to its historical volatility, FormPipe Software AB is 1.06 times less risky than Lundin Mining. It trades about 0.01 of its potential returns per unit of risk. Lundin Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,441 in Lundin Mining on August 26, 2024 and sell it today you would earn a total of 3,649 from holding Lundin Mining or generate 49.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FormPipe Software AB vs. Lundin Mining
Performance |
| Timeline |
| FormPipe Software |
| Lundin Mining |
FormPipe Software and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FormPipe Software and Lundin Mining
The main advantage of trading using opposite FormPipe Software and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormPipe Software position performs unexpectedly, Lundin Mining 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 Mining will offset losses from the drop in Lundin Mining's long position.| FormPipe Software vs. Enea AB | FormPipe Software vs. Novotek AB | FormPipe Software vs. Addnode Group AB | FormPipe Software vs. Softronic AB |
| Lundin Mining vs. Boliden AB | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF | Lundin Mining vs. Sandvik AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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