Correlation Between Lundin Mining and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Lucara Diamond 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 Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and Lucara Diamond Corp, you can compare the effects of market volatilities on Lundin Mining and Lucara Diamond 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 Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Lucara Diamond.
Diversification Opportunities for Lundin Mining and Lucara Diamond
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lundin and Lucara is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp 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 Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Lundin Mining i.e., Lundin Mining and Lucara Diamond go up and down completely randomly.
Pair Corralation between Lundin Mining and Lucara Diamond
Assuming the 90 days trading horizon Lundin Mining is expected to generate 0.72 times more return on investment than Lucara Diamond. However, Lundin Mining is 1.39 times less risky than Lucara Diamond. It trades about 0.05 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.02 per unit of risk. If you would invest 7,687 in Lundin Mining on August 31, 2024 and sell it today you would earn a total of 2,973 from holding Lundin Mining or generate 38.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining vs. Lucara Diamond Corp
Performance |
| Timeline |
| Lundin Mining |
| Lucara Diamond Corp |
Lundin Mining and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Lucara Diamond
The main advantage of trading using opposite Lundin Mining and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.| Lundin Mining vs. Boliden AB | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF | Lundin Mining vs. Sandvik AB |
| Lucara Diamond vs. Africa Oil Corp | Lucara Diamond vs. Lundin Gold | Lucara Diamond vs. Lundin Mining | Lucara Diamond vs. Inwido 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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