Correlation Between Lundin Energy and C PARAN
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and C PARAN 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 C PARAN 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 C PARAN EN, you can compare the effects of market volatilities on Lundin Energy and C PARAN 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 C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and C PARAN.
Diversification Opportunities for Lundin Energy and C PARAN
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lundin and ELP1 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN 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 C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of Lundin Energy i.e., Lundin Energy and C PARAN go up and down completely randomly.
Pair Corralation between Lundin Energy and C PARAN
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the C PARAN. In addition to that, Lundin Energy is 2.05 times more volatile than C PARAN EN. It trades about -0.05 of its total potential returns per unit of risk. C PARAN EN is currently generating about 0.04 per unit of volatility. If you would invest 466.00 in C PARAN EN on September 4, 2024 and sell it today you would earn a total of 144.00 from holding C PARAN EN or generate 30.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lundin Energy AB vs. C PARAN EN
Performance |
| Timeline |
| Lundin Energy AB |
| C PARAN EN |
Lundin Energy and C PARAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and C PARAN
The main advantage of trading using opposite Lundin Energy and C PARAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, C PARAN 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 C PARAN will offset losses from the drop in C PARAN's long position.| Lundin Energy vs. NXP Semiconductors NV | Lundin Energy vs. Strategic Education | Lundin Energy vs. COMMERCIAL VEHICLE | Lundin Energy vs. Cars Inc |
| C PARAN vs. IBERDROLA ADR1 EO | C PARAN vs. SSE PLC ADR | C PARAN vs. CIA ENGER ADR | C PARAN vs. Companhia Energtica de |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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