Correlation Between Lundin Mining and Thor Mining

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

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

Diversification Opportunities for Lundin Mining and Thor Mining

-0.12

Correlation Coefficient

Lundin Mining  Thor Mining

Good diversification

The 3 months correlation between Lundin and Thor is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Thor Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Mining PLC and Lundin 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 Lundin Mining Corp are associated (or correlated) with Thor Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Mining PLC has no effect on the direction of Lundin Mining i.e., Lundin Mining and Thor Mining go up and down completely randomly.

Pair Corralation between Lundin Mining and Thor Mining

Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 0.62 times more return on investment than Thor Mining. However, Lundin Mining Corp is 1.61 times less risky than Thor Mining. It trades about -0.02 of its potential returns per unit of risk. Thor Mining PLC is currently generating about -0.03 per unit of risk. If you would invest  9,969  in Lundin Mining Corp on September 19, 2024 and sell it today you would lose (581.00) from holding Lundin Mining Corp or give up 5.83% of portfolio value over 90 days.

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

Lundin Mining Corp  vs.  Thor Mining PLC

Lundin Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lundin Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Thor Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lundin Mining and Thor Mining

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

The idea behind Lundin Mining Corp and Thor Mining PLC 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.