Correlation Between GoldMining and Lundin Mining

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

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

Diversification Opportunities for GoldMining and Lundin Mining

0.47

Correlation Coefficient

GoldMining  Lundin Mining

Very weak diversification

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

Pair Corralation between GoldMining and Lundin Mining

Assuming the 90 days trading horizon GoldMining is expected to generate 0.87 times more return on investment than Lundin Mining. However, GoldMining is 1.15 times less risky than Lundin Mining. It trades about 0.08 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.02 per unit of risk. If you would invest  111.00  in GoldMining on December 26, 2024 and sell it today you would earn a total of  8.00  from holding GoldMining or generate 7.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.13%
Values	Daily Returns

GoldMining  vs.  Lundin Mining Corp

GoldMining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GoldMining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with GoldMining and Lundin Mining

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

The idea behind GoldMining and Lundin Mining Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.