Correlation Between Oracle and Lundin Mining

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

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

Diversification Opportunities for Oracle and Lundin Mining

0.36

Correlation Coefficient

Oracle  Lundin Mining

Weak diversification

The 3 months correlation between Oracle and Lundin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Oracle 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 Oracle 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 Oracle i.e., Oracle and Lundin Mining go up and down completely randomly.

Pair Corralation between Oracle and Lundin Mining

Given the investment horizon of 90 days Oracle is expected to generate 1.27 times more return on investment than Lundin Mining. However, Oracle is 1.27 times more volatile than Lundin Mining. It trades about -0.03 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.14 per unit of risk. If you would invest  18,094  in Oracle on December 1, 2024 and sell it today you would lose (1,488) from holding Oracle or give up 8.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Oracle  vs.  Lundin Mining

Oracle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oracle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Oracle and Lundin Mining

The main advantage of trading using opposite Oracle and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle 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 Oracle 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.