Correlation Between Palamina Corp and Lundin Gold
Can any of the company-specific risk be diversified away by investing in both Palamina Corp and Lundin Gold 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 Palamina Corp and Lundin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palamina Corp and Lundin Gold, you can compare the effects of market volatilities on Palamina Corp and Lundin Gold 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 Palamina Corp with a short position of Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palamina Corp and Lundin Gold.
Diversification Opportunities for Palamina Corp and Lundin Gold
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Palamina and Lundin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and Palamina Corp 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 Palamina Corp are associated (or correlated) with Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Palamina Corp i.e., Palamina Corp and Lundin Gold go up and down completely randomly.
Pair Corralation between Palamina Corp and Lundin Gold
Assuming the 90 days horizon Palamina Corp is expected to generate 3.33 times more return on investment than Lundin Gold. However, Palamina Corp is 3.33 times more volatile than Lundin Gold. It trades about 0.05 of its potential returns per unit of risk. Lundin Gold is currently generating about 0.09 per unit of risk. If you would invest 6.10 in Palamina Corp on September 3, 2024 and sell it today you would earn a total of 3.17 from holding Palamina Corp or generate 51.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palamina Corp vs. Lundin Gold
Performance |
| Timeline |
| Palamina Corp |
| Lundin Gold |
Palamina Corp and Lundin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palamina Corp and Lundin Gold
The main advantage of trading using opposite Palamina Corp and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palamina Corp position performs unexpectedly, Lundin Gold 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 Lundin Gold will offset losses from the drop in Lundin Gold's long position.| Palamina Corp vs. Gold Springs Resource | Palamina Corp vs. BTU Metals Corp | Palamina Corp vs. Norsemont Mining | Palamina Corp vs. FireFox Gold Corp |
| Lundin Gold vs. Harmony Gold Mining | Lundin Gold vs. SPACE | Lundin Gold vs. T Rowe Price | Lundin Gold vs. Ampleforth |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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