Correlation Between Lundin Energy and Stemsation International
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and Stemsation International 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 Stemsation International 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 Stemsation International, you can compare the effects of market volatilities on Lundin Energy and Stemsation International 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 Stemsation International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and Stemsation International.
Diversification Opportunities for Lundin Energy and Stemsation International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and Stemsation is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Stemsation International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stemsation International 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 Stemsation International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stemsation International has no effect on the direction of Lundin Energy i.e., Lundin Energy and Stemsation International go up and down completely randomly.
Pair Corralation between Lundin Energy and Stemsation International
Assuming the 90 days horizon Lundin Energy AB is expected to generate 0.19 times more return on investment than Stemsation International. However, Lundin Energy AB is 5.31 times less risky than Stemsation International. It trades about -0.34 of its potential returns per unit of risk. Stemsation International is currently generating about -0.16 per unit of risk. If you would invest 74.00 in Lundin Energy AB on August 25, 2024 and sell it today you would lose (17.00) from holding Lundin Energy AB or give up 22.97% 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. Stemsation International
Performance |
| Timeline |
| Lundin Energy AB |
| Stemsation International |
Lundin Energy and Stemsation International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and Stemsation International
The main advantage of trading using opposite Lundin Energy and Stemsation International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, Stemsation International 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 Stemsation International will offset losses from the drop in Stemsation International's long position.| Lundin Energy vs. Constellation Energy Corp | Lundin Energy vs. Verbund AG ADR | Lundin Energy vs. Orsted AS ADR |
| Stemsation International vs. Green Cures Botanical | Stemsation International vs. Galexxy Holdings | Stemsation International vs. Indoor Harvest Corp | Stemsation International 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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