Correlation Between Lundin Energy and COMMERCIAL VEHICLE

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

Diversification Opportunities for Lundin Energy and COMMERCIAL VEHICLE

0.83

Correlation Coefficient

Lundin Energy  COMMERCIAL VEHICLE

Very poor diversification

The 3 months correlation between Lundin and COMMERCIAL is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of Lundin Energy i.e., Lundin Energy and COMMERCIAL VEHICLE go up and down completely randomly.

Pair Corralation between Lundin Energy and COMMERCIAL VEHICLE

Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the COMMERCIAL VEHICLE. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Energy AB is 2.06 times less risky than COMMERCIAL VEHICLE. The stock trades about -0.15 of its potential returns per unit of risk. The COMMERCIAL VEHICLE is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  300.00  in COMMERCIAL VEHICLE on September 12, 2024 and sell it today you would lose (76.00) from holding COMMERCIAL VEHICLE or give up 25.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Lundin Energy AB  vs.  COMMERCIAL VEHICLE

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

COMMERCIAL VEHICLE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMMERCIAL VEHICLE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lundin Energy and COMMERCIAL VEHICLE

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

The idea behind Lundin Energy AB and COMMERCIAL VEHICLE 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.