Correlation Between Lundin Energy and RIV Capital
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and RIV Capital 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 Energy and RIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Energy AB and RIV Capital, you can compare the effects of market volatilities on Lundin Energy and RIV Capital 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 Energy with a short position of RIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and RIV Capital.
Diversification Opportunities for Lundin Energy and RIV Capital
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and RIV is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and RIV Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIV Capital and Lundin Energy 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 Energy AB are associated (or correlated) with RIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIV Capital has no effect on the direction of Lundin Energy i.e., Lundin Energy and RIV Capital go up and down completely randomly.
Pair Corralation between Lundin Energy and RIV Capital
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the RIV Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lundin Energy AB is 1.63 times less risky than RIV Capital. The pink sheet trades about -0.03 of its potential returns per unit of risk. The RIV Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 27.00 in RIV Capital on August 26, 2024 and sell it today you would lose (18.20) from holding RIV Capital or give up 67.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. RIV Capital
Performance |
| Timeline |
| Lundin Energy AB |
| RIV Capital |
Lundin Energy and RIV Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and RIV Capital
The main advantage of trading using opposite Lundin Energy and RIV Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, RIV Capital 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 RIV Capital will offset losses from the drop in RIV Capital's long position.| Lundin Energy vs. Constellation Energy Corp | Lundin Energy vs. Verbund AG ADR | Lundin Energy vs. Orsted AS ADR |
| RIV Capital vs. Green Cures Botanical | RIV Capital vs. Galexxy Holdings | RIV Capital vs. Indoor Harvest Corp | RIV Capital vs. Speakeasy Cannabis Club |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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