Correlation Between Lundin Mining and SolTech Energy
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and SolTech Energy 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 SolTech Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and SolTech Energy Sweden, you can compare the effects of market volatilities on Lundin Mining and SolTech Energy 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 SolTech Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and SolTech Energy.
Diversification Opportunities for Lundin Mining and SolTech Energy
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lundin and SolTech is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and SolTech Energy Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolTech Energy Sweden 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 SolTech Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolTech Energy Sweden has no effect on the direction of Lundin Mining i.e., Lundin Mining and SolTech Energy go up and down completely randomly.
Pair Corralation between Lundin Mining and SolTech Energy
Assuming the 90 days trading horizon Lundin Mining is expected to generate 0.64 times more return on investment than SolTech Energy. However, Lundin Mining is 1.55 times less risky than SolTech Energy. It trades about 0.06 of its potential returns per unit of risk. SolTech Energy Sweden is currently generating about -0.06 per unit of risk. If you would invest 6,053 in Lundin Mining on September 3, 2024 and sell it today you would earn a total of 4,607 from holding Lundin Mining or generate 76.11% 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. SolTech Energy Sweden
Performance |
| Timeline |
| Lundin Mining |
| SolTech Energy Sweden |
Lundin Mining and SolTech Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and SolTech Energy
The main advantage of trading using opposite Lundin Mining and SolTech Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, SolTech Energy 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 SolTech Energy will offset losses from the drop in SolTech Energy's long position.| Lundin Mining vs. Boliden AB | Lundin Mining vs. Lundin Gold | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF |
| SolTech Energy vs. Eolus Vind AB | SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB | SolTech Energy vs. Powercell Sweden |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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