Correlation Between Murchison Minerals and Lundin Gold

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

By analyzing existing cross correlation between Murchison Minerals and Lundin Gold, you can compare the effects of market volatilities on Murchison Minerals and Lundin Gold 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 Murchison Minerals with a short position of Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murchison Minerals and Lundin Gold.

Diversification Opportunities for Murchison Minerals and Lundin Gold

0.06

Correlation Coefficient

Murchison Minerals  Lundin Gold

Significant diversification

The 3 months correlation between Murchison and Lundin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Murchison Minerals and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and Murchison Minerals 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 Murchison Minerals are associated (or correlated) with Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Murchison Minerals i.e., Murchison Minerals and Lundin Gold go up and down completely randomly.

Pair Corralation between Murchison Minerals and Lundin Gold

Assuming the 90 days horizon Murchison Minerals is expected to generate 4.81 times more return on investment than Lundin Gold. However, Murchison Minerals is 4.81 times more volatile than Lundin Gold. It trades about 0.03 of its potential returns per unit of risk. Lundin Gold is currently generating about 0.12 per unit of risk. If you would invest  3.50  in Murchison Minerals on October 5, 2024 and sell it today you would lose (2.00) from holding Murchison Minerals or give up 57.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Murchison Minerals  vs.  Lundin Gold

Murchison Minerals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Murchison Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Murchison Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Lundin Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Lundin Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Murchison Minerals and Lundin Gold

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

The idea behind Murchison Minerals and Lundin Gold 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.