Correlation Between Lundin Energy and Vestiage

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

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

Diversification Opportunities for Lundin Energy and Vestiage

-0.79

Correlation Coefficient

Lundin Energy  Vestiage

Pay attention - limited upside

The 3 months correlation between Lundin and Vestiage is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Vestiage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestiage and Lundin Energy 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 Energy AB are associated (or correlated) with Vestiage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestiage has no effect on the direction of Lundin Energy i.e., Lundin Energy and Vestiage go up and down completely randomly.

Pair Corralation between Lundin Energy and Vestiage

Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the Vestiage. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lundin Energy AB is 39.74 times less risky than Vestiage. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Vestiage is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2.60  in Vestiage on September 23, 2024 and sell it today you would earn a total of  7.30  from holding Vestiage or generate 280.77% return on investment over 90 days.

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

Lundin Energy AB  vs.  Vestiage

Lundin Energy AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Energy AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vestiage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vestiage are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vestiage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Energy and Vestiage

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

The idea behind Lundin Energy AB and Vestiage 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.