Correlation Between Lundin Mining and AlzeCure Pharma
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and AlzeCure Pharma 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 Mining and AlzeCure Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and AlzeCure Pharma, you can compare the effects of market volatilities on Lundin Mining and AlzeCure Pharma 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 Mining with a short position of AlzeCure Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and AlzeCure Pharma.
Diversification Opportunities for Lundin Mining and AlzeCure Pharma
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lundin and AlzeCure is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and AlzeCure Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlzeCure Pharma and Lundin Mining 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 Mining are associated (or correlated) with AlzeCure Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlzeCure Pharma has no effect on the direction of Lundin Mining i.e., Lundin Mining and AlzeCure Pharma go up and down completely randomly.
Pair Corralation between Lundin Mining and AlzeCure Pharma
Assuming the 90 days trading horizon Lundin Mining is expected to generate 0.51 times more return on investment than AlzeCure Pharma. However, Lundin Mining is 1.94 times less risky than AlzeCure Pharma. It trades about 0.04 of its potential returns per unit of risk. AlzeCure Pharma is currently generating about -0.02 per unit of risk. If you would invest 6,486 in Lundin Mining on November 2, 2024 and sell it today you would earn a total of 2,809 from holding Lundin Mining or generate 43.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining vs. AlzeCure Pharma
Performance |
| Timeline |
| Lundin Mining |
| AlzeCure Pharma |
Lundin Mining and AlzeCure Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and AlzeCure Pharma
The main advantage of trading using opposite Lundin Mining and AlzeCure Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, AlzeCure Pharma 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 AlzeCure Pharma will offset losses from the drop in AlzeCure Pharma's long position.| Lundin Mining vs. Boliden AB | Lundin Mining vs. Lundin Gold | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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