Correlation Between Lundin Energy and SIIC Environment

Can any of the company-specific risk be diversified away by investing in both Lundin Energy and SIIC Environment 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 SIIC Environment 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 SIIC Environment Holdings, you can compare the effects of market volatilities on Lundin Energy and SIIC Environment 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 SIIC Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and SIIC Environment.

Diversification Opportunities for Lundin Energy and SIIC Environment

-0.08

Correlation Coefficient

Lundin Energy  SIIC Environment

Good diversification

The 3 months correlation between Lundin and SIIC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and SIIC Environment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIIC Environment Holdings 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 SIIC Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIIC Environment Holdings has no effect on the direction of Lundin Energy i.e., Lundin Energy and SIIC Environment go up and down completely randomly.

Pair Corralation between Lundin Energy and SIIC Environment

If you would invest  69.00  in Lundin Energy AB on February 3, 2024 and sell it today you would earn a total of  4.00  from holding Lundin Energy AB or generate 5.8% return on investment over 90 days.

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

Lundin Energy AB  vs.  SIIC Environment Holdings

Lundin Energy AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Energy AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lundin Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

SIIC Environment Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIIC Environment Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, SIIC Environment may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Lundin Energy and SIIC Environment

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

The idea behind Lundin Energy AB and SIIC Environment Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.