Correlation Between Lundin Mining and Havsfrun Investment

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

By analyzing existing cross correlation between Lundin Mining and Havsfrun Investment AB, you can compare the effects of market volatilities on Lundin Mining and Havsfrun Investment 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 Havsfrun Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Havsfrun Investment.

Diversification Opportunities for Lundin Mining and Havsfrun Investment

-0.17

Correlation Coefficient

Lundin Mining  Havsfrun Investment

Good diversification

The 3 months correlation between Lundin and Havsfrun is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and Havsfrun Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havsfrun Investment 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 Havsfrun Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havsfrun Investment has no effect on the direction of Lundin Mining i.e., Lundin Mining and Havsfrun Investment go up and down completely randomly.

Pair Corralation between Lundin Mining and Havsfrun Investment

Assuming the 90 days trading horizon Lundin Mining is expected to under-perform the Havsfrun Investment. In addition to that, Lundin Mining is 1.09 times more volatile than Havsfrun Investment AB. It trades about -0.05 of its total potential returns per unit of risk. Havsfrun Investment AB is currently generating about 0.03 per unit of volatility. If you would invest  1,235  in Havsfrun Investment AB on October 10, 2024 and sell it today you would earn a total of  70.00  from holding Havsfrun Investment AB or generate 5.67% 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.  Havsfrun Investment AB

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Havsfrun Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Havsfrun Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Mining and Havsfrun Investment

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

The idea behind Lundin Mining and Havsfrun Investment AB 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.