Correlation Between Lundin Mining and TotalEnergies

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

Diversification Opportunities for Lundin Mining and TotalEnergies

-0.26

Correlation Coefficient

Lundin Mining  TotalEnergies

Very good diversification

The 3 months correlation between Lundin and TotalEnergies is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE 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 TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE has no effect on the direction of Lundin Mining i.e., Lundin Mining and TotalEnergies go up and down completely randomly.

Pair Corralation between Lundin Mining and TotalEnergies

Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the TotalEnergies. In addition to that, Lundin Mining is 1.26 times more volatile than TotalEnergies SE. It trades about -0.02 of its total potential returns per unit of risk. TotalEnergies SE is currently generating about 0.11 per unit of volatility. If you would invest  5,187  in TotalEnergies SE on December 26, 2024 and sell it today you would earn a total of  733.00  from holding TotalEnergies SE or generate 14.13% return on investment over 90 days.

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

Lundin Mining Corp  vs.  TotalEnergies SE

Lundin Mining Corp

Risk-Adjusted Performance

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.

TotalEnergies SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, TotalEnergies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Mining and TotalEnergies

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

The idea behind Lundin Mining Corp and TotalEnergies SE 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.