Correlation Between Autoliv and Lundin Mining
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By analyzing existing cross correlation between Autoliv and Lundin Mining, you can compare the effects of market volatilities on Autoliv 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 Autoliv with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Lundin Mining.
Diversification Opportunities for Autoliv and Lundin Mining
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Autoliv and Lundin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Autoliv 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 Autoliv 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 has no effect on the direction of Autoliv i.e., Autoliv and Lundin Mining go up and down completely randomly.
Pair Corralation between Autoliv and Lundin Mining
Assuming the 90 days trading horizon Autoliv is expected to generate 2.81 times less return on investment than Lundin Mining. But when comparing it to its historical volatility, Autoliv is 1.73 times less risky than Lundin Mining. It trades about 0.18 of its potential returns per unit of risk. Lundin Mining is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 11,275 in Lundin Mining on February 2, 2024 and sell it today you would earn a total of 1,785 from holding Lundin Mining or generate 15.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Autoliv vs. Lundin Mining
Performance |
Timeline |
Autoliv |
Lundin Mining |
Autoliv and Lundin Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Autoliv and Lundin Mining
The main advantage of trading using opposite Autoliv and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv 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 Autoliv and Lundin Mining 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.Lundin Mining vs. Boliden AB | Lundin Mining vs. Lundin Gold | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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