Correlation Between Beowulf Mining and Lundin Mining

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

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

Diversification Opportunities for Beowulf Mining and Lundin Mining

0.38

Correlation Coefficient

Beowulf Mining  Lundin Mining

Weak diversification

The 3 months correlation between Beowulf and Lundin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Beowulf Mining 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 Beowulf 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 Beowulf Mining 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 Beowulf Mining i.e., Beowulf Mining and Lundin Mining go up and down completely randomly.

Pair Corralation between Beowulf Mining and Lundin Mining

Assuming the 90 days trading horizon Beowulf Mining is expected to under-perform the Lundin Mining. In addition to that, Beowulf Mining is 1.55 times more volatile than Lundin Mining Corp. It trades about -0.15 of its total potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.04 per unit of volatility. If you would invest  11,587  in Lundin Mining Corp on September 24, 2024 and sell it today you would lose (2,117) from holding Lundin Mining Corp or give up 18.27% of portfolio value over 90 days.

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

Beowulf Mining  vs.  Lundin Mining Corp

Beowulf Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beowulf Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Beowulf Mining and Lundin Mining

The main advantage of trading using opposite Beowulf Mining and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beowulf Mining 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 Beowulf Mining 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.