Correlation Between Roadside Real and Lundin Mining

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

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

Diversification Opportunities for Roadside Real and Lundin Mining

0.64

Correlation Coefficient

Roadside Real  Lundin Mining

Poor diversification

The 3 months correlation between Roadside and Lundin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Roadside Real Estate and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp and Roadside Real 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 Roadside Real Estate 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 Corp has no effect on the direction of Roadside Real i.e., Roadside Real and Lundin Mining go up and down completely randomly.

Pair Corralation between Roadside Real and Lundin Mining

Assuming the 90 days trading horizon Roadside Real Estate is expected to generate 0.74 times more return on investment than Lundin Mining. However, Roadside Real Estate is 1.36 times less risky than Lundin Mining. It trades about 0.33 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about 0.1 per unit of risk. If you would invest  2,040  in Roadside Real Estate on September 4, 2024 and sell it today you would earn a total of  1,040  from holding Roadside Real Estate or generate 50.98% return on investment over 90 days.

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

Roadside Real Estate  vs.  Lundin Mining Corp

Roadside Real Estate

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Roadside Real Estate are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Roadside Real unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lundin Mining Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Mining Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lundin Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roadside Real and Lundin Mining

The main advantage of trading using opposite Roadside Real and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roadside Real 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 Roadside Real Estate and Lundin Mining Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.