Correlation Between Online Brands and Lundin Mining

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

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

Diversification Opportunities for Online Brands and Lundin Mining

0.39

Correlation Coefficient

Online Brands  Lundin Mining

Weak diversification

The 3 months correlation between Online and Lundin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Online Brands Nordic and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Online Brands 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 Online Brands Nordic are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining has no effect on the direction of Online Brands i.e., Online Brands and Lundin Mining go up and down completely randomly.

Pair Corralation between Online Brands and Lundin Mining

Assuming the 90 days trading horizon Online Brands Nordic is expected to generate 1.9 times more return on investment than Lundin Mining. However, Online Brands is 1.9 times more volatile than Lundin Mining. It trades about 0.14 of its potential returns per unit of risk. Lundin Mining is currently generating about 0.05 per unit of risk. If you would invest  946.00  in Online Brands Nordic on September 15, 2024 and sell it today you would earn a total of  429.00  from holding Online Brands Nordic or generate 45.35% return on investment over 90 days.

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

Online Brands Nordic  vs.  Lundin Mining

Online Brands Nordic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Online Brands Nordic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Online Brands unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lundin Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lundin Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Online Brands and Lundin Mining

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

The idea behind Online Brands Nordic and Lundin Mining 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.