Correlation Between KABE Group and Lundin Gold

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

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

Diversification Opportunities for KABE Group and Lundin Gold

-0.34

Correlation Coefficient

KABE Group  Lundin Gold

Very good diversification

The 3 months correlation between KABE and Lundin is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KABE Group AB and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and KABE Group 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 KABE Group AB 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 KABE Group i.e., KABE Group and Lundin Gold go up and down completely randomly.

Pair Corralation between KABE Group and Lundin Gold

Assuming the 90 days trading horizon KABE Group AB is expected to under-perform the Lundin Gold. But the stock apears to be less risky and, when comparing its historical volatility, KABE Group AB is 1.51 times less risky than Lundin Gold. The stock trades about -0.1 of its potential returns per unit of risk. The Lundin Gold is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  19,573  in Lundin Gold on September 4, 2024 and sell it today you would earn a total of  6,177  from holding Lundin Gold or generate 31.56% return on investment over 90 days.

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

KABE Group AB  vs.  Lundin Gold

KABE Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KABE Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lundin Gold

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Lundin Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KABE Group and Lundin Gold

The main advantage of trading using opposite KABE Group and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KABE Group 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 KABE Group AB 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.