Correlation Between Kinnevik Investment and Lundin Mining

Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Lundin Mining 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 Kinnevik Investment and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinnevik Investment AB and Lundin Mining Corp, you can compare the effects of market volatilities on Kinnevik Investment and Lundin Mining 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 Kinnevik Investment with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Lundin Mining.

Diversification Opportunities for Kinnevik Investment and Lundin Mining

0.1

Correlation Coefficient

Kinnevik Investment  Lundin Mining

Average diversification

The 3 months correlation between Kinnevik and Lundin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp and Kinnevik Investment 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 Kinnevik Investment AB are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Lundin Mining go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Lundin Mining

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Lundin Mining. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 1.33 times less risky than Lundin Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Lundin Mining Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  11,627  in Lundin Mining Corp on September 28, 2024 and sell it today you would lose (1,817) from holding Lundin Mining Corp or give up 15.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kinnevik Investment AB  vs.  Lundin Mining Corp

Kinnevik Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnevik Investment AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Lundin Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lundin Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kinnevik Investment and Lundin Mining

The main advantage of trading using opposite Kinnevik Investment and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Lundin Mining 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 Mining will offset losses from the drop in Lundin Mining's long position.

The idea behind Kinnevik Investment AB and Lundin Mining Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.