Correlation Between Lundin Mining and AURUBIS AG

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

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

Diversification Opportunities for Lundin Mining and AURUBIS AG

-0.35

Correlation Coefficient

Lundin Mining  AURUBIS AG

Very good diversification

The 3 months correlation between Lundin and AURUBIS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and AURUBIS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS AG UNSPADR and Lundin 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 Lundin Mining are associated (or correlated) with AURUBIS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS AG UNSPADR has no effect on the direction of Lundin Mining i.e., Lundin Mining and AURUBIS AG go up and down completely randomly.

Pair Corralation between Lundin Mining and AURUBIS AG

Assuming the 90 days horizon Lundin Mining is expected to generate 0.78 times more return on investment than AURUBIS AG. However, Lundin Mining is 1.28 times less risky than AURUBIS AG. It trades about 0.06 of its potential returns per unit of risk. AURUBIS AG UNSPADR is currently generating about 0.01 per unit of risk. If you would invest  564.00  in Lundin Mining on September 23, 2024 and sell it today you would earn a total of  232.00  from holding Lundin Mining or generate 41.13% return on investment over 90 days.

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

Lundin Mining  vs.  AURUBIS AG UNSPADR

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 nearly stable basic indicators, Lundin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AURUBIS AG UNSPADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS AG UNSPADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AURUBIS AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Mining and AURUBIS AG

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

The idea behind Lundin Mining and AURUBIS AG UNSPADR 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.