Correlation Between Lundin Energy and Kaman

Can any of the company-specific risk be diversified away by investing in both Lundin Energy and Kaman 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 Kaman 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 Kaman, you can compare the effects of market volatilities on Lundin Energy and Kaman 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 Kaman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and Kaman.

Diversification Opportunities for Lundin Energy and Kaman

-0.68

Correlation Coefficient

Lundin Energy  Kaman

Excellent diversification

The 3 months correlation between Lundin and Kaman is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Kaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaman 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 Kaman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaman has no effect on the direction of Lundin Energy i.e., Lundin Energy and Kaman go up and down completely randomly.

Pair Corralation between Lundin Energy and Kaman

If you would invest  2,402  in Kaman on October 3, 2024 and sell it today you would earn a total of  0.00  from holding Kaman or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.37%
Values	Daily Returns

Lundin Energy AB  vs.  Kaman

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kaman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Kaman is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lundin Energy and Kaman

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

The idea behind Lundin Energy AB and Kaman 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.