Correlation Between Boiron SA and Lundin Mining

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

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

Diversification Opportunities for Boiron SA and Lundin Mining

0.42

Correlation Coefficient

Boiron SA  Lundin Mining

Very weak diversification

The 3 months correlation between Boiron and Lundin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Boiron SA 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 Boiron SA 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 Boiron SA i.e., Boiron SA and Lundin Mining go up and down completely randomly.

Pair Corralation between Boiron SA and Lundin Mining

Assuming the 90 days horizon Boiron SA is expected to generate 1.14 times more return on investment than Lundin Mining. However, Boiron SA is 1.14 times more volatile than Lundin Mining. It trades about 0.04 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.24 per unit of risk. If you would invest  2,630  in Boiron SA on September 29, 2024 and sell it today you would earn a total of  35.00  from holding Boiron SA or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Boiron SA  vs.  Lundin Mining

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Boiron SA and Lundin Mining

The main advantage of trading using opposite Boiron SA and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boiron SA 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 Boiron SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.