Correlation Between COOR Service and Lundin Mining

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

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

Diversification Opportunities for COOR Service and Lundin Mining

0.04

Correlation Coefficient

COOR Service  Lundin Mining

Significant diversification

The 3 months correlation between COOR and Lundin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding COOR Service Management and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and COOR Service 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 COOR Service Management 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 COOR Service i.e., COOR Service and Lundin Mining go up and down completely randomly.

Pair Corralation between COOR Service and Lundin Mining

Assuming the 90 days trading horizon COOR Service Management is expected to generate 0.99 times more return on investment than Lundin Mining. However, COOR Service Management is 1.01 times less risky than Lundin Mining. It trades about 0.0 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.02 per unit of risk. If you would invest  3,400  in COOR Service Management on December 21, 2024 and sell it today you would lose (72.00) from holding COOR Service Management or give up 2.12% of portfolio value over 90 days.

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

COOR Service Management  vs.  Lundin Mining

COOR Service Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days COOR Service Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, COOR Service is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lundin Mining

Risk-Adjusted Performance

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 comparatively stable basic indicators, Lundin Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COOR Service and Lundin Mining

The main advantage of trading using opposite COOR Service and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COOR Service 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 COOR Service Management 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 Anywhere module to track or share privately all of your investments from the convenience of any device.