Correlation Between Lundin Mining and MilDef Group
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and MilDef Group 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 MilDef Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and MilDef Group AB, you can compare the effects of market volatilities on Lundin Mining and MilDef Group 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 MilDef Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and MilDef Group.
Diversification Opportunities for Lundin Mining and MilDef Group
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lundin and MilDef is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and MilDef Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MilDef Group AB 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 MilDef Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MilDef Group AB has no effect on the direction of Lundin Mining i.e., Lundin Mining and MilDef Group go up and down completely randomly.
Pair Corralation between Lundin Mining and MilDef Group
Assuming the 90 days trading horizon Lundin Mining is expected to under-perform the MilDef Group. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Mining is 1.38 times less risky than MilDef Group. The stock trades about -0.05 of its potential returns per unit of risk. The MilDef Group AB is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 10,020 in MilDef Group AB on September 12, 2024 and sell it today you would earn a total of 1,860 from holding MilDef Group AB or generate 18.56% 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. MilDef Group AB
Performance |
| Timeline |
| Lundin Mining |
| MilDef Group AB |
Lundin Mining and MilDef Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and MilDef Group
The main advantage of trading using opposite Lundin Mining and MilDef Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, MilDef Group 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 MilDef Group will offset losses from the drop in MilDef Group's long position.| Lundin Mining vs. Boliden AB | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF | Lundin Mining vs. Sandvik AB |
| MilDef Group vs. I Tech | MilDef Group vs. Filo Mining Corp | MilDef Group vs. Lundin Mining | MilDef Group vs. Redsense Medical 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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