Correlation Between Lundin Energy and MONGOLIAN MINING

Can any of the company-specific risk be diversified away by investing in both Lundin Energy and MONGOLIAN 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 Energy and MONGOLIAN MINING 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 MONGOLIAN MINING CRPREGS, you can compare the effects of market volatilities on Lundin Energy and MONGOLIAN 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 Energy with a short position of MONGOLIAN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and MONGOLIAN MINING.

Diversification Opportunities for Lundin Energy and MONGOLIAN MINING

-0.63

Correlation Coefficient

Lundin Energy  MONGOLIAN MINING

Excellent diversification

The 3 months correlation between Lundin and MONGOLIAN is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and MONGOLIAN MINING CRPREGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONGOLIAN MINING CRPREGS 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 MONGOLIAN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONGOLIAN MINING CRPREGS has no effect on the direction of Lundin Energy i.e., Lundin Energy and MONGOLIAN MINING go up and down completely randomly.

Pair Corralation between Lundin Energy and MONGOLIAN MINING

Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the MONGOLIAN MINING. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Energy AB is 1.71 times less risky than MONGOLIAN MINING. The stock trades about -0.12 of its potential returns per unit of risk. The MONGOLIAN MINING CRPREGS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  85.00  in MONGOLIAN MINING CRPREGS on September 5, 2024 and sell it today you would earn a total of  8.00  from holding MONGOLIAN MINING CRPREGS or generate 9.41% 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.  MONGOLIAN MINING CRPREGS

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 fragile 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.

MONGOLIAN MINING CRPREGS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MONGOLIAN MINING CRPREGS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MONGOLIAN MINING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Energy and MONGOLIAN MINING

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

The idea behind Lundin Energy AB and MONGOLIAN MINING CRPREGS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.