Correlation Between Lundin Mining and Compal Electronics

Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Compal Electronics 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 Compal Electronics 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 Compal Electronics GDR, you can compare the effects of market volatilities on Lundin Mining and Compal Electronics 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 Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Compal Electronics.

Diversification Opportunities for Lundin Mining and Compal Electronics

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Correlation Coefficient

Lundin Mining  Compal Electronics

Pay attention - limited upside

The 3 months correlation between Lundin and Compal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Compal Electronics GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics GDR 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 Compal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compal Electronics GDR has no effect on the direction of Lundin Mining i.e., Lundin Mining and Compal Electronics go up and down completely randomly.

Pair Corralation between Lundin Mining and Compal Electronics

Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 1.27 times more return on investment than Compal Electronics. However, Lundin Mining is 1.27 times more volatile than Compal Electronics GDR. It trades about 0.03 of its potential returns per unit of risk. Compal Electronics GDR is currently generating about 0.01 per unit of risk. If you would invest  7,231  in Lundin Mining Corp on October 25, 2024 and sell it today you would earn a total of  2,289  from holding Lundin Mining Corp or generate 31.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Lundin Mining Corp  vs.  Compal Electronics GDR

Lundin Mining Corp

Risk-Adjusted Performance

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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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Compal Electronics GDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compal Electronics GDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Compal Electronics 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 Compal Electronics

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

The idea behind Lundin Mining Corp and Compal Electronics GDR 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.