Correlation Between Lundin Mining and Hudbay Minerals

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

By analyzing existing cross correlation between Lundin Mining and Hudbay Minerals, you can compare the effects of market volatilities on Lundin Mining and Hudbay Minerals 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 Hudbay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Hudbay Minerals.

Diversification Opportunities for Lundin Mining and Hudbay Minerals

-0.46

Correlation Coefficient

Lundin Mining  Hudbay Minerals

Very good diversification

The 3 months correlation between Lundin and Hudbay is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and Hudbay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudbay Minerals 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 are associated (or correlated) with Hudbay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudbay Minerals has no effect on the direction of Lundin Mining i.e., Lundin Mining and Hudbay Minerals go up and down completely randomly.

Pair Corralation between Lundin Mining and Hudbay Minerals

If you would invest  742.00  in Hudbay Minerals on September 14, 2024 and sell it today you would earn a total of  122.00  from holding Hudbay Minerals or generate 16.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Lundin Mining  vs.  Hudbay Minerals

Lundin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Lundin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hudbay Minerals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudbay Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Hudbay Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Mining and Hudbay Minerals

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

The idea behind Lundin Mining and Hudbay Minerals 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 Global Correlations module to find global opportunities by holding instruments from different markets.