Correlation Between Lundin Energy and POLENERGIA
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and POLENERGIA 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 Energy and POLENERGIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Energy AB and POLENERGIA SA ZY, you can compare the effects of market volatilities on Lundin Energy and POLENERGIA 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 Energy with a short position of POLENERGIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and POLENERGIA.
Diversification Opportunities for Lundin Energy and POLENERGIA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lundin and POLENERGIA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and POLENERGIA SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLENERGIA SA ZY and Lundin Energy 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 Energy AB are associated (or correlated) with POLENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLENERGIA SA ZY has no effect on the direction of Lundin Energy i.e., Lundin Energy and POLENERGIA go up and down completely randomly.
Pair Corralation between Lundin Energy and POLENERGIA
Assuming the 90 days horizon Lundin Energy AB is expected to generate 1.38 times more return on investment than POLENERGIA. However, Lundin Energy is 1.38 times more volatile than POLENERGIA SA ZY. It trades about 0.11 of its potential returns per unit of risk. POLENERGIA SA ZY is currently generating about -0.06 per unit of risk. If you would invest 54.00 in Lundin Energy AB on September 13, 2024 and sell it today you would earn a total of 3.00 from holding Lundin Energy AB or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. POLENERGIA SA ZY
Performance |
| Timeline |
| Lundin Energy AB |
| POLENERGIA SA ZY |
Lundin Energy and POLENERGIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and POLENERGIA
The main advantage of trading using opposite Lundin Energy and POLENERGIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, POLENERGIA 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 POLENERGIA will offset losses from the drop in POLENERGIA's long position.| Lundin Energy vs. 24SEVENOFFICE GROUP AB | Lundin Energy vs. Columbia Sportswear | Lundin Energy vs. Air Transport Services | Lundin Energy vs. ANTA SPORTS PRODUCT |
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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 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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