Correlation Between Lundin Mining and OptiCept Technologies

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

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

Diversification Opportunities for Lundin Mining and OptiCept Technologies

0.55

Correlation Coefficient

Lundin Mining  OptiCept Technologies

Very weak diversification

The 3 months correlation between Lundin and OptiCept is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and OptiCept Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiCept Technologies 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 OptiCept Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiCept Technologies has no effect on the direction of Lundin Mining i.e., Lundin Mining and OptiCept Technologies go up and down completely randomly.

Pair Corralation between Lundin Mining and OptiCept Technologies

Assuming the 90 days trading horizon Lundin Mining is expected to under-perform the OptiCept Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Mining is 1.54 times less risky than OptiCept Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The OptiCept Technologies AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  495.00  in OptiCept Technologies AB on December 23, 2024 and sell it today you would lose (21.00) from holding OptiCept Technologies AB or give up 4.24% of portfolio value over 90 days.

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

Lundin Mining  vs.  OptiCept Technologies AB

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.

OptiCept Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lundin Mining and OptiCept Technologies

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

The idea behind Lundin Mining and OptiCept Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.