Correlation Between Lundin Mining and MOL Hungarian

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

By analyzing existing cross correlation between Lundin Mining Corp and MOL Hungarian Oil, you can compare the effects of market volatilities on Lundin Mining and MOL Hungarian 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 MOL Hungarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and MOL Hungarian.

Diversification Opportunities for Lundin Mining and MOL Hungarian

-0.24

Correlation Coefficient

Lundin Mining  MOL Hungarian

Very good diversification

The 3 months correlation between Lundin and MOL is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and MOL Hungarian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL Hungarian Oil 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 Corp are associated (or correlated) with MOL Hungarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL Hungarian Oil has no effect on the direction of Lundin Mining i.e., Lundin Mining and MOL Hungarian go up and down completely randomly.

Pair Corralation between Lundin Mining and MOL Hungarian

Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 1.75 times more return on investment than MOL Hungarian. However, Lundin Mining is 1.75 times more volatile than MOL Hungarian Oil. It trades about 0.05 of its potential returns per unit of risk. MOL Hungarian Oil is currently generating about 0.02 per unit of risk. If you would invest  7,478  in Lundin Mining Corp on October 5, 2024 and sell it today you would earn a total of  2,347  from holding Lundin Mining Corp or generate 31.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.28%
Values	Daily Returns

Lundin Mining Corp  vs.  MOL Hungarian Oil

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 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.

MOL Hungarian Oil

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOL Hungarian Oil are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MOL Hungarian is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lundin Mining and MOL Hungarian

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

The idea behind Lundin Mining Corp and MOL Hungarian Oil 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.