Correlation Between Lundin Gold and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Lundin Gold 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 Lundin Gold and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Gold and Lundin Mining, you can compare the effects of market volatilities on Lundin Gold 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 Lundin Gold with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Gold and Lundin Mining.
Diversification Opportunities for Lundin Gold and Lundin Mining
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and Lundin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Lundin Gold 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 Gold 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 Lundin Gold i.e., Lundin Gold and Lundin Mining go up and down completely randomly.
Pair Corralation between Lundin Gold and Lundin Mining
Assuming the 90 days trading horizon Lundin Gold is expected to under-perform the Lundin Mining. In addition to that, Lundin Gold is 1.16 times more volatile than Lundin Mining. It trades about -0.03 of its total potential returns per unit of risk. Lundin Mining is currently generating about 0.01 per unit of volatility. If you would invest 10,870 in Lundin Mining on August 29, 2024 and sell it today you would lose (30.00) from holding Lundin Mining or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Gold vs. Lundin Mining
Performance |
| Timeline |
| Lundin Gold |
| Lundin Mining |
Lundin Gold and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Gold and Lundin Mining
The main advantage of trading using opposite Lundin Gold and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Gold 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.| Lundin Gold vs. Lundin Mining | Lundin Gold vs. Africa Oil Corp | Lundin Gold vs. International Petroleum | Lundin Gold vs. Boliden 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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