Correlation Between Lundin Energy and Global Digital

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

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

Diversification Opportunities for Lundin Energy and Global Digital

-0.38

Correlation Coefficient

Lundin Energy  Global Digital

Very good diversification

The 3 months correlation between Lundin and Global is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Global Digital Soltn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Digital Soltn and Lundin Energy 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 Energy AB are associated (or correlated) with Global Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Digital Soltn has no effect on the direction of Lundin Energy i.e., Lundin Energy and Global Digital go up and down completely randomly.

Pair Corralation between Lundin Energy and Global Digital

If you would invest  0.01  in Global Digital Soltn on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Global Digital Soltn or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Lundin Energy AB  vs.  Global Digital Soltn

Lundin Energy AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Energy AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal 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.

Global Digital Soltn

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Digital Soltn are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Global Digital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Energy and Global Digital

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

The idea behind Lundin Energy AB and Global Digital Soltn 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.