Correlation Between Radisson Mining and Lundin Gold

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

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

Diversification Opportunities for Radisson Mining and Lundin Gold

-0.3

Correlation Coefficient

Radisson Mining  Lundin Gold

Very good diversification

The 3 months correlation between Radisson and Lundin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Radisson Mining Resources and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and Radisson Mining 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 Radisson Mining Resources 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 Radisson Mining i.e., Radisson Mining and Lundin Gold go up and down completely randomly.

Pair Corralation between Radisson Mining and Lundin Gold

Assuming the 90 days horizon Radisson Mining is expected to generate 10.74 times less return on investment than Lundin Gold. In addition to that, Radisson Mining is 1.39 times more volatile than Lundin Gold. It trades about 0.02 of its total potential returns per unit of risk. Lundin Gold is currently generating about 0.25 per unit of volatility. If you would invest  2,192  in Lundin Gold on October 27, 2024 and sell it today you would earn a total of  278.00  from holding Lundin Gold or generate 12.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Radisson Mining Resources  vs.  Lundin Gold

Radisson Mining Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Radisson Mining Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Radisson Mining reported 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. Despite nearly stable fundamental indicators, Lundin Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Radisson Mining and Lundin Gold

The main advantage of trading using opposite Radisson Mining and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radisson Mining 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 Radisson Mining Resources 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.