Correlation Between Lundin Energy and TOREX SEMICONDUCTOR

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

Diversification Opportunities for Lundin Energy and TOREX SEMICONDUCTOR

-0.7

Correlation Coefficient

Lundin Energy  TOREX SEMICONDUCTOR

Excellent diversification

The 3 months correlation between Lundin and TOREX is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and TOREX SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOREX SEMICONDUCTOR LTD 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 TOREX SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOREX SEMICONDUCTOR LTD has no effect on the direction of Lundin Energy i.e., Lundin Energy and TOREX SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Lundin Energy and TOREX SEMICONDUCTOR

Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the TOREX SEMICONDUCTOR. In addition to that, Lundin Energy is 1.06 times more volatile than TOREX SEMICONDUCTOR LTD. It trades about -0.23 of its total potential returns per unit of risk. TOREX SEMICONDUCTOR LTD is currently generating about 0.06 per unit of volatility. If you would invest  704.00  in TOREX SEMICONDUCTOR LTD on December 28, 2024 and sell it today you would earn a total of  54.00  from holding TOREX SEMICONDUCTOR LTD or generate 7.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Lundin Energy AB  vs.  TOREX SEMICONDUCTOR LTD

Lundin Energy AB

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOREX SEMICONDUCTOR LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TOREX SEMICONDUCTOR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lundin Energy and TOREX SEMICONDUCTOR

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

The idea behind Lundin Energy AB and TOREX SEMICONDUCTOR LTD 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.