Correlation Between Lundin Mining and Neometals

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

Diversification Opportunities for Lundin Mining and Neometals

0.43

Correlation Coefficient

Lundin Mining  Neometals

Very weak diversification

The 3 months correlation between Lundin and Neometals is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Lundin Mining i.e., Lundin Mining and Neometals go up and down completely randomly.

Pair Corralation between Lundin Mining and Neometals

Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 0.62 times more return on investment than Neometals. However, Lundin Mining Corp is 1.6 times less risky than Neometals. It trades about 0.03 of its potential returns per unit of risk. Neometals is currently generating about -0.02 per unit of risk. If you would invest  10,523  in Lundin Mining Corp on September 2, 2024 and sell it today you would earn a total of  232.00  from holding Lundin Mining Corp or generate 2.2% return on investment over 90 days.

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

Lundin Mining Corp  vs.  Neometals

Lundin Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Neometals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lundin Mining and Neometals

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

The idea behind Lundin Mining Corp and Neometals 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 Stocks Directory module to find actively traded stocks across global markets.