Correlation Between Lundin Mining and Tavistock Investments

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

Diversification Opportunities for Lundin Mining and Tavistock Investments

-0.47

Correlation Coefficient

Lundin Mining  Tavistock Investments

Very good diversification

The 3 months correlation between Lundin and Tavistock is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Tavistock Investments Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tavistock Investments Plc 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 Tavistock Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tavistock Investments Plc has no effect on the direction of Lundin Mining i.e., Lundin Mining and Tavistock Investments go up and down completely randomly.

Pair Corralation between Lundin Mining and Tavistock Investments

Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the Tavistock Investments. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Mining Corp is 1.41 times less risky than Tavistock Investments. The stock trades about -0.04 of its potential returns per unit of risk. The Tavistock Investments Plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  377.00  in Tavistock Investments Plc on October 8, 2024 and sell it today you would earn a total of  48.00  from holding Tavistock Investments Plc or generate 12.73% return on investment over 90 days.

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

Lundin Mining Corp  vs.  Tavistock Investments Plc

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tavistock Investments Plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tavistock Investments Plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Tavistock Investments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Mining and Tavistock Investments

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

The idea behind Lundin Mining Corp and Tavistock Investments Plc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.