Correlation Between Apple and Lundin Mining

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

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

Diversification Opportunities for Apple and Lundin Mining

-0.66

Correlation Coefficient

Apple  Lundin Mining

Excellent diversification

The 3 months correlation between Apple and Lundin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Apple 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 Apple Inc CDR 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 has no effect on the direction of Apple i.e., Apple and Lundin Mining go up and down completely randomly.

Pair Corralation between Apple and Lundin Mining

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.44 times more return on investment than Lundin Mining. However, Apple Inc CDR is 2.29 times less risky than Lundin Mining. It trades about 0.33 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.07 per unit of risk. If you would invest  3,311  in Apple Inc CDR on October 1, 2024 and sell it today you would earn a total of  429.00  from holding Apple Inc CDR or generate 12.96% return on investment over 90 days.

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

Apple Inc CDR  vs.  Lundin Mining

Apple Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lundin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Apple and Lundin Mining

The main advantage of trading using opposite Apple and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc CDR and Lundin Mining 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.