Correlation Between Lundin Mining and Sileon AB

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

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

Diversification Opportunities for Lundin Mining and Sileon AB

0.31

Correlation Coefficient

Lundin Mining  Sileon AB

Weak diversification

The 3 months correlation between Lundin and Sileon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and Sileon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sileon AB 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 Sileon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sileon AB has no effect on the direction of Lundin Mining i.e., Lundin Mining and Sileon AB go up and down completely randomly.

Pair Corralation between Lundin Mining and Sileon AB

Assuming the 90 days trading horizon Lundin Mining is expected to under-perform the Sileon AB. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Mining is 6.21 times less risky than Sileon AB. The stock trades about -0.04 of its potential returns per unit of risk. The Sileon AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Sileon AB on December 23, 2024 and sell it today you would lose (328.00) from holding Sileon AB or give up 51.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Lundin Mining  vs.  Sileon 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.

Sileon AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sileon AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Sileon AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lundin Mining and Sileon AB

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

The idea behind Lundin Mining and Sileon 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.