Correlation Between Gear4music Plc and Lundin Mining

Can any of the company-specific risk be diversified away by investing in both Gear4music Plc 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 Gear4music Plc and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gear4music Plc and Lundin Mining Corp, you can compare the effects of market volatilities on Gear4music Plc 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 Gear4music Plc with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear4music Plc and Lundin Mining.

Diversification Opportunities for Gear4music Plc and Lundin Mining

-0.36

Correlation Coefficient

Gear4music Plc  Lundin Mining

Very good diversification

The 3 months correlation between Gear4music and Lundin is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gear4music Plc 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 Gear4music Plc 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 Gear4music Plc 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 Gear4music Plc i.e., Gear4music Plc and Lundin Mining go up and down completely randomly.

Pair Corralation between Gear4music Plc and Lundin Mining

Assuming the 90 days trading horizon Gear4music Plc is expected to under-perform the Lundin Mining. But the stock apears to be less risky and, when comparing its historical volatility, Gear4music Plc is 1.41 times less risky than Lundin Mining. The stock trades about -0.03 of its potential returns per unit of risk. The Lundin Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,266  in Lundin Mining Corp on September 14, 2024 and sell it today you would earn a total of  662.00  from holding Lundin Mining Corp or generate 7.14% return on investment over 90 days.

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

Gear4music Plc  vs.  Lundin Mining Corp

Gear4music Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gear4music Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Gear4music Plc is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Lundin Mining Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Mining Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Lundin Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gear4music Plc and Lundin Mining

The main advantage of trading using opposite Gear4music Plc and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear4music Plc 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 Gear4music Plc 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.