Correlation Between Larsen Toubro and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Larsen Toubro 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 Larsen Toubro and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Larsen Toubro Limited and Lundin Mining Corp, you can compare the effects of market volatilities on Larsen Toubro 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 Larsen Toubro with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Larsen Toubro and Lundin Mining.
Diversification Opportunities for Larsen Toubro and Lundin Mining
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Larsen and Lundin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Larsen Toubro Limited and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp and Larsen Toubro 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 Larsen Toubro Limited 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 Corp has no effect on the direction of Larsen Toubro i.e., Larsen Toubro and Lundin Mining go up and down completely randomly.
Pair Corralation between Larsen Toubro and Lundin Mining
Assuming the 90 days trading horizon Larsen Toubro is expected to generate 6.74 times less return on investment than Lundin Mining. But when comparing it to its historical volatility, Larsen Toubro Limited is 1.42 times less risky than Lundin Mining. It trades about 0.02 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,168 in Lundin Mining Corp on August 27, 2024 and sell it today you would earn a total of 2,952 from holding Lundin Mining Corp or generate 36.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Larsen Toubro Limited vs. Lundin Mining Corp
Performance |
| Timeline |
| Larsen Toubro Limited |
| Lundin Mining Corp |
Larsen Toubro and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Larsen Toubro and Lundin Mining
The main advantage of trading using opposite Larsen Toubro and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Larsen Toubro 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.| Larsen Toubro vs. Lundin Mining Corp | Larsen Toubro vs. AfriTin Mining | Larsen Toubro vs. Anglesey Mining | Larsen Toubro vs. Coeur Mining |
| Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Hyundai Motor | Lundin Mining vs. Toyota Motor Corp |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |