Correlation Between Lundin Mining and International Petroleum
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and International Petroleum 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 International Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and International Petroleum, you can compare the effects of market volatilities on Lundin Mining and International Petroleum 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 International Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and International Petroleum.
Diversification Opportunities for Lundin Mining and International Petroleum
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lundin and International is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and International Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Petroleum 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 International Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Petroleum has no effect on the direction of Lundin Mining i.e., Lundin Mining and International Petroleum go up and down completely randomly.
Pair Corralation between Lundin Mining and International Petroleum
Assuming the 90 days trading horizon Lundin Mining is expected to generate 1.22 times more return on investment than International Petroleum. However, Lundin Mining is 1.22 times more volatile than International Petroleum. It trades about 0.04 of its potential returns per unit of risk. International Petroleum is currently generating about 0.04 per unit of risk. If you would invest 7,930 in Lundin Mining on August 30, 2024 and sell it today you would earn a total of 2,760 from holding Lundin Mining or generate 34.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining vs. International Petroleum
Performance |
| Timeline |
| Lundin Mining |
| International Petroleum |
Lundin Mining and International Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and International Petroleum
The main advantage of trading using opposite Lundin Mining and International Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, International Petroleum 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 International Petroleum will offset losses from the drop in International Petroleum's long position.| Lundin Mining vs. Boliden AB | Lundin Mining vs. Lundin Gold | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF |
| International Petroleum vs. Africa Oil Corp | International Petroleum vs. Tethys Oil AB | International Petroleum vs. Maha Energy AB | International Petroleum vs. Cortus Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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